Working Paper: NBER ID: w25139
Authors: Jacob Goldin; Daniel Reck
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.
Keywords: framing effects; revealed preference analysis; pension enrollment; decision-making; behavioral economics
JEL Codes: C1; D03; D60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| frame (policy type) (G52) | choices (preferences) (D01) |
| consistent decision-makers (D91) | true preferences (D11) |
| preferences of consistent decision-makers (D91) | preferences of inconsistent decision-makers (D91) |
| preferences can be identified despite framing effects (D91) | significant majority of employees prefer enrollment in pension plans (H55) |