Reference dependence and random attention

We explore the ways that a reference point may direct attention. Utilizing a stochastic choice framework, we provide behavioral foundations for the Reference-Dependent Random Attention Model (RD-RAM). Our characterization result shows that preferences may be uniquely identified even when the attention process depends arbitrarily on both the menu and the reference point. We then analyze specific attention processes, characterizing reference-dependent versions of several prominent models of stochastic consideration. Our analysis illustrates which attention processes can accommodate behavioral patterns commonly observed in studies, such as frequency reversals among non-status quo alternatives and choice overload.

Automated summary

We explore how a reference point can direct attention and provide a behavioral framework for the Reference-Dependent Random Attention Model (RD-RAM). Our results show that preferences can be uniquely identified even when the attention process depends on both the menu and the reference point. We also analyze specific attention processes and characterize reference-dependent versions of several prominent models, illustrating their ability to explain observed behavioral patterns.