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  5. Associative Networks in Decision Making

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Associative Networks in Decision Making

  • Jiangtao Li
  • Rui Tang
  • Mu Zhang
American Economic Review (Forthcoming)

Abstract

We present a model of associative networks that captures how decision makers expand their consideration set through mental associations between alternatives. Our model provides a tractable approach to study how associations shape choice when some alternatives are available and others are merely observable but unavailable. We characterize the model within a random attention framework and demonstrate unique identification of all parameters. This framework delivers a unified account of several prominent choice anomalies, including classic menu effects and their “phantom” counterparts. We illustrate how associative links serve as a strategic variable in applications such as branding, imitation, and platform design.

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