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Frame-dependent Random Utility

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  • Paul H. Y. Cheung
  • Yusufcan Masatlioglu

Abstract

We explore the influence of framing on decision-making, where some products are framed (e.g., displayed, recommended, endorsed, or labeled). We introduce a novel choice function that captures observed variations in framed alternatives. Building on this, we conduct a comprehensive revealed preference analysis, employing the concept of frame-dependent utility using both deterministic and probabilistic data. We demonstrate that simple and intuitive behavioral principles characterize our frame-dependent random utility model (FRUM), which offers testable conditions even with limited data. Finally, we introduce a parametric model to increase the tractability of FRUM. We also discuss how to recover the choice types in our framework.

Suggested Citation

  • Paul H. Y. Cheung & Yusufcan Masatlioglu, 2025. "Frame-dependent Random Utility," Papers 2502.00209, arXiv.org.
    • Handle: RePEc:arx:papers:2502.00209
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