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Attention-driven probability weighting

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  • Wang, Di

Abstract

This paper presents a theory of choice under risk based on attention and salience. With a smooth salience function and the incorporation of reference-dependence, the model provides a comprehensive account for the observation of nonlinear and context-dependent probability weighting functions.

Suggested Citation

  • Wang, Di, 2021. "Attention-driven probability weighting," Economics Letters, Elsevier, vol. 203(C).
    • Handle: RePEc:eee:ecolet:v:203:y:2021:i:c:s0165176521001154
    DOI: 10.1016/j.econlet.2021.109838
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    References listed on IDEAS

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    Cited by:

    1. Matthew D. Rablen, 2023. "Loss Aversion, Risk Aversion, and the Shape of the Probability Weighting Function," Working Papers 2023013, The University of Sheffield, Department of Economics.

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    More about this item

    Keywords

    Choice under risk; Salience; Attention; Probability weighting;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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