Revealed (P)reference theory

TitleRevealed (P)reference theory
Publication TypeJournal Article
Year of Publication2015
AuthorsOk EA, Ortoleva P, Riella G
JournalAmerican Economic Review
Date Publishedjan
ISBN Number0002-8282
AbstractThis paper develops axiomatically a revealed preference theory of reference-dependent choice behavior. Instead of taking the refer-ence for an agent as exogenously given in the description of a choice problem, we suitably relax the Weak Axiom of Revealed Preference to obtain, endogenously, the existence of reference alternatives as well as the structure of choice behavior conditional on those alternatives. We show how this model captures some well-known choice patterns such as the attraction effect. (JEL D11, D81)