2018 Fiscal Year Annual Research Report
Behavioral and welfare implications of reference-dependent shortlisting behavior
| Project/Area Number |
16K17091
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| Research Institution | Tohoku University |
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Principal Investigator |
QIN DAN 東北大学, 経済学研究科, 准教授 (10756092)
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| Project Period (FY) |
2016-04-01 – 2019-03-31
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| Keywords | reference-dependent / revealed preference / bounded rationality |
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| Outline of Annual Research Achievements |
In this academic year, the research was proceeding smoothly. I have successfully characterized a general model of the reference-dependent choice procedure with multiple decision criteria. The most important finding is that the aggregation method connecting multiple decision-making criteria and the decision maker's final preference is non-consequential. In other words, it is impossible to distinguish different aggregation methods by observation of choice alone. The implication is twofold. On one hand, a large part of the underlying decision-making procedure cannot be inferred if the only information available is the choice data. On the other hand, decision maker consistent with the choice procedure is suitable for welfare evaluation following the model-free approach, because the Paretian preference is the only part retained by all reasonable aggregation methods and the model-free approach only involves unreverted revealed preference. Expanding on the main finding, I explored information required, in addition to choice data, to differentiate underlying aggregation methods. It turns out that partial differentiation is possible if the number of criteria can be observed. The article summarizing these findings are under review for the third round in a top field journal.
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