Revealed Preference Analysis with Framing Effects

41 Pages Posted: 8 Oct 2018

See all articles by Jacob Goldin

Jacob Goldin

Stanford Law School

Daniel Reck

London School of Economics & Political Science (LSE)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2018

Abstract

In many settings, decision-makers' behavior is observed to vary based on seemingly arbitrary factors. Such framing effects cast doubt on the welfare conclusions drawn from revealed preference analysis. We relax the assumptions underlying that approach to accommodate settings in which framing effects are present. Plausible restrictions of varying strength permit either partial- or point-identification of preferences for the decision-makers who choose consistently across frames. Recovering population preferences requires understanding the empirical relationship between decision-makers’ preferences and their sensitivity to the frame. We develop tools for studying this relationship and illustrate them with data on automatic enrollment into pension plans.

Suggested Citation

Goldin, Jacob and Reck, Daniel, Revealed Preference Analysis with Framing Effects (October 2018). NBER Working Paper No. w25139, Available at SSRN: https://ssrn.com/abstract=3262402

Jacob Goldin (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Daniel Reck

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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