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Framing Effects as Violations of Extensionality

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  • Sacha Bourgeois-Gironde

    ()
    (IJN - Institut Jean-Nicod - CNRS : UMR8129 - Ecole Normale Supérieure de Paris - ENS Paris - Ecole des Hautes Etudes en Sciences Sociales (EHESS))

  • Raphaël Giraud

    (CRESE - Centre de Recherche sur les Stratégies Economiques)

Abstract

Framing effects occur when different descriptions of the same decision problem give rise to divergent decisions. They can be seen as a violation of the decisiontheoretic version of the principle of extensionality (PE). The PE in logic means that two logically equivalent sentences can be substituted salva veritate. We explore what this notion of extensionality becomes in decision contexts. Violations of extensionality may have rational grounds. Based on some ideas proposed by the psychologist Craig McKenzie and colleagues, we contend that framing effects are justified when the selection of one particular frame conveys choice relevant information. We first discuss this idea from a philosophical point of view, and proceed next to formalize it first in the context of the Bolker–Jeffrey decision theory. Finally, we extend the previous analysis to non-expected utility theories using the Biseparable Preference model introduced by Ghirardato and Marinacci (2001) and therefore show that the analysis is independent of the assumptions of Bayesian decision theory.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number ijn_00432662.

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Date of creation: 2009
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Publication status: Published, Theory and Decision, 2009, 67, 4, 385-404
Handle: RePEc:hal:journl:ijn_00432662

Note: View the original document on HAL open archive server: http://jeannicod.ccsd.cnrs.fr/ijn_00432662/en/
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Related research

Keywords: framing-effects; extensionality; information processing; Bolker-Jeffrey decision model; biseparable preferences;

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  1. Paolo Ghirardato & Massimo Marinacci, 2000. "Risk, Ambiguity, and the Separation of Utility and Beliefs," Levine's Working Paper Archive 7616, David K. Levine.
  2. Marc Menestrel & Bertrand Lemaire, 2006. "Ratio-Scale Measurement with Intransitivity or Incompleteness: The Homogeneous Case," Theory and Decision, Springer, vol. 60(2), pages 207-217, 05.
  3. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  4. Marc Le Menestrel & Luk Van Wassenhove, 2001. "The Domain and Interpretation of Utility Functions: An Exploration," Theory and Decision, Springer, vol. 51(2), pages 329-349, December.
  5. Raphaël Giraud, 2004. "Framing under risk : Endogenizing the Reference Point and Separating Cognition and Decision," Cahiers de la Maison des Sciences Economiques bla04090, Université Panthéon-Sorbonne (Paris 1).
  6. Gold, Natalie & List, Christian, 2004. "Framing as Path Dependence," Economics and Philosophy, Cambridge University Press, vol. 20(02), pages 253-277, October.
  7. Tversky, Amos & Kahneman, Daniel, 1992. " Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
  8. Lipman, Barton L, 1999. "Decision Theory without Logical Omniscience: Toward an Axiomatic Framework for Bounded Rationality," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 339-61, April.
  9. Arrow, Kenneth J, 1982. "Risk Perception in Psychology and Economics," Economic Inquiry, Western Economic Association International, vol. 20(1), pages 1-9, January.
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Cited by:
  1. Dorian Jullien, 2013. "Asian Disease-type of Framing of Outcomes as an Historical Curiosity," GREDEG Working Papers 2013-47, Groupe de REcherche en Droit, Économie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

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