Reference-Dependent Choice Bracketing
Speaker(s)Pauline Vorjohann (University of Exeter, United Kingdom)
LocationUniversity of Amsterdam, Roeterseilandcampus, room E0.03
Date and time
April 06, 2023
15:30 - 16:45
I derive a theoretical model of choice bracketing from two behavioral axioms in an expected utility framework. The first behavioral axiom establishes a direct link between narrow bracketing and correlation neglect. The second behavioral axiom identifies the reference point as the place where broad and narrow preferences are connected. In my model, the narrow bracketer is characterized by an inability to process changes from the reference point in different dimensions simultaneously. As a result, her tradeoffs between dimensions are distorted. While she disregards interactions between actual outcomes, she appreciates these interactions mistakenly with respect to the reference point.