Attribute-Based Inferences and Random Limited Consideration: A Representation Result

Abstract

This paper presents an axiomatic model of random limited considerations under attribute-based inferences. To characterize the model, this paper takes the framework of preferences over menus. The key axiom characterizes a model of random consideration sets, which is an extended and generalized version of the reference-dependent choice model of Ok et al. (2015) in the sense that (i) consideration sets are formed under attribute-based inferences randomly, and that (ii) reference points themselves can be chosen from menus. The two extensions make it possible to allow for not only the Attraction Effect, but also the Compromise Effect.