||"A Cognitive Foundation for Social Image Concerns" |
This paper provides a cognitive foundation for social image concerns by studying preferences over menus; that is, this paper studies the social-image formation in the decision-making process. This framework has a two-stage decision problem. At the first stage, the decision maker chooses a menu; at the second stage, she chooses an option from the chosen menu at the first stage. In social image theory, the decision maker cares about how her choice behaviors are perceived by other agents. We do anticipate such emotions at the second stage and we, therefore, study plausible axioms at the first stage. However, the decision maker may feel the emotions even in the first stage. By capturing such a trade-off as an endogenous reference-point formation, this paper builds an axiomatic model, in which the trade-offs in the first stage determine social image concerns; that is, the factors behind social image concerns depend on endogenous reference points. This paper explores both the anticipation of image concerns and the formation of image concerns. This paper uniquely identifies the building blocks of the model. Moreover, this paper studies menu effects in terms of pride-seeking preferences, shame-averse preferences, and temptation-driven preferences, which can lead to violations of Weak Axiom of Revealed Preference (WARP).