Associative Networks in Decision Making

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.