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Framing-Based Choice: A Model of Decision-Making Under Risk

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  • Kobi Kriesler
  • Shmuel Nitzan

    ()
    (Department of Economics, Bar Ilan University)

Abstract

In this study we propose an axiomatic theory of decision-making under risk that is based on a new approach to the modeling of framing that focuses on the subjective statistical dependence between prizes of compared lotteries. Unlike existing models that allow objective statistical dependence, as in Regret Theory, in our model the emphasis is on alternative subjective statistical dependence patterns that are induced by alternative descriptions of the lotteries, i.e., by alternative framing. A distinct advantage of the proposed general descriptive model of choice is its ability to adequately explain a wide variety of behaviors and, in particular, several well-known paradoxes of different types.

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File URL: http://www.biu.ac.il/soc/ec/wp/2009-17.pdf
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Bibliographic Info

Paper provided by Department of Economics, Bar-Ilan University in its series Working Papers with number 2009-17.

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Date of creation: Jun 2009
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Handle: RePEc:biu:wpaper:2009-17

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Postal: Faculty of Social Sciences, Bar Ilan University 52900 Ramat-Gan
Phone: Phone: +972-3-5318345
Fax: +972-3-7384034
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Web page: http://econ.biu.ac.il
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Keywords: framing; statistical dependence; non-expected utility; expected value of lottery interchange;

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References

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