A theory of reference point formation
          
                  O. Kıbrıs, Y. Masatlioglu, and E. Suleymanov
      
  
, 
            Economic Theory
      
            January
      
            2021
      
  Abstract
              We introduce a model of reference-dependent choice where the reference point is endogenously determined through maximization of a conspicuity ranking. This subjective ranking captures how prominent or eye-catching the alternatives are relative to one another. The most conspicuous alternative in a choice set serves as the reference point and in turn determines the reference-dependent utility function the decision maker maximizes to make a choice.
