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A Ratio-Difference Theory of Choice: An Article Written to Honor Richard Hollis Day

Author

Listed:
  • Mina Mahmoudi
  • Mark Pingle
  • Rattaphon Wuthisatian

Abstract

We humans find it difficult to comprehend the magnitude of one thing without comparing the magnitudes of two things. When we compare two magnitudes, we tend to use ratios and differences. This suggests a procedural theory of decision making should contain the possibility of using ratios and differences in the process. Here, we present a “ratio-difference†theory of decision-making. We illustrate that a procedural decision theory that gives weight to ratio comparisons and difference comparisons has the potential to not only provide standard choice theory conclusions but also explain a number of decision anomalies.

Suggested Citation

  • Mina Mahmoudi & Mark Pingle & Rattaphon Wuthisatian, 2022. "A Ratio-Difference Theory of Choice: An Article Written to Honor Richard Hollis Day," Review of Behavioral Economics, now publishers, vol. 9(2), pages 155-171, June.
    • Handle: RePEc:now:jnlrbe:105.00000151
    DOI: 10.1561/105.00000151
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