Kibris, O., Masatlioglu. Y. and Suleymanov, E.
A random reference model - American Economic Journal: Microeconomics - 16(1), Feb, 2024: p.155-209
This study introduces two nested models of random reference-dependent choice, where the reference point is determined by random processes. Despite the randomness in reference points, choices appear deterministic to decision-makers. The analysis includes a revealed preference framework to identify reference-dependent preferences and the random reference rule from observed choice data. Behavioral postulates are formulated to outline the empirical content of these models, ensuring their theoretical robustness. Furthermore, the study explores the application of these models to Bertrand competition with differentiated products, highlighting their practical relevance. These findings contribute to a deeper understanding of random reference-dependent behavior and its implications in both theoretical and applied contexts, such as market competition and consumer choice theory.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20220089
Random Reference-Dependent Choice, Deterministic Choices, Revealed Preference, Behavioral Postulates, Empirical Models, Bertrand Competition, Differentiated Products
A random reference model - American Economic Journal: Microeconomics - 16(1), Feb, 2024: p.155-209
This study introduces two nested models of random reference-dependent choice, where the reference point is determined by random processes. Despite the randomness in reference points, choices appear deterministic to decision-makers. The analysis includes a revealed preference framework to identify reference-dependent preferences and the random reference rule from observed choice data. Behavioral postulates are formulated to outline the empirical content of these models, ensuring their theoretical robustness. Furthermore, the study explores the application of these models to Bertrand competition with differentiated products, highlighting their practical relevance. These findings contribute to a deeper understanding of random reference-dependent behavior and its implications in both theoretical and applied contexts, such as market competition and consumer choice theory.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20220089
Random Reference-Dependent Choice, Deterministic Choices, Revealed Preference, Behavioral Postulates, Empirical Models, Bertrand Competition, Differentiated Products