Random Attention and Unobserved Reference Alternatives

Abstract: In this paper, I develop and characterize a random attention model with unobserved reference alternatives. The decision-maker pays attention to different subsets of the available set of alternatives randomly. The reference alternatives are exactly those alternatives that are always paid attention to, i.e. they are attention-privileged. These alternatives are unknown to the outside observer. The characterization allows for a complete identification of the reference alternatives and a coarse identification of the underlying preferences. I then restrict the model by considering the independent random attention function and provide a complete identification of the underlying preferences.