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Framing Contingencies


  • David S. Ahn
  • Haluk Ergin


The subjective likelihood of a contingency often depends on the manner in which it is described to the decision maker. To accommodate this dependence, we introduce a model of decision making under uncertainty that takes as primitive a family of preferences indexed by partitions of the state space. Each partition corresponds to a description of the state space. We characterize the following partition-dependent expected utility representation. The decision maker has a nonadditive set function ν over events. Given a partition of the state space, she computes expected utility with respect to her partition-dependent belief, which weights each cell in the partition by ν. Nonadditivity of ν allows the probability of an event to depend on the way in which the state space is described. We propose behavioral definitions for those events that are transparent to the decision maker and those that are completely overlooked, and connect these definitions to conditions on the representation. Copyright 2010 The Econometric Society.

Suggested Citation

  • David S. Ahn & Haluk Ergin, 2010. "Framing Contingencies," Econometrica, Econometric Society, vol. 78(2), pages 655-695, March.
  • Handle: RePEc:ecm:emetrp:v:78:y:2010:i:2:p:655-695

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    References listed on IDEAS

    1. Andrew Chesher, 2003. "Identification in Nonseparable Models," Econometrica, Econometric Society, vol. 71(5), pages 1405-1441, September.
    2. Victor Chernozhukov & Sokbae Lee & Adam M. Rosen, 2013. "Intersection Bounds: Estimation and Inference," Econometrica, Econometric Society, vol. 81(2), pages 667-737, March.
    3. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects, and Econometric Policy Evaluation," Econometrica, Econometric Society, vol. 73(3), pages 669-738, May.
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    6. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, March.
    7. Carrasco, Marine & Florens, Jean-Pierre, 2000. "Generalization Of Gmm To A Continuum Of Moment Conditions," Econometric Theory, Cambridge University Press, vol. 16(06), pages 797-834, December.
    8. Andrew Chesher, 2005. "Nonparametric Identification under Discrete Variation," Econometrica, Econometric Society, vol. 73(5), pages 1525-1550, September.
    9. Moon, Hyungsik Roger & Schorfheide, Frank, 2006. "Boosting Your Instruments: Estimation with Overidentifying Inequality Moment Conditions," CEPR Discussion Papers 5605, C.E.P.R. Discussion Papers.
    10. Chernozhukov, Victor & Imbens, Guido W. & Newey, Whitney K., 2007. "Instrumental variable estimation of nonseparable models," Journal of Econometrics, Elsevier, vol. 139(1), pages 4-14, July.
    11. Rosen, Adam M., 2008. "Confidence sets for partially identified parameters that satisfy a finite number of moment inequalities," Journal of Econometrics, Elsevier, vol. 146(1), pages 107-117, September.
    12. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 147-165.
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    Cited by:

    1. Burkhard Schipper, 2013. "Awareness-dependent subjective expected utility," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(3), pages 725-753, August.
    2. Zhao, Xiaojian, 2011. "Framing contingencies in contracts," Mathematical Social Sciences, Elsevier, vol. 61(1), pages 31-40, January.
    3. Karni, Edi & Vierø, Marie-Louise, 2017. "Awareness of unawareness: A theory of decision making in the face of ignorance," Journal of Economic Theory, Elsevier, vol. 168(C), pages 301-328.
    4. Takashi Hayashi, 2012. "Expanding state space and extension of beliefs," Theory and Decision, Springer, vol. 73(4), pages 591-604, October.
    5. Dietrich, Franz, 2016. "Savage's Theorem Under Changing Awareness," MPRA Paper 71306, University Library of Munich, Germany.
    6. Tsakas, Elias, 2016. "Reasonable doubt revisited," Research Memorandum 017, Maastricht University, Graduate School of Business and Economics (GSBE).
    7. Dorian Jullien, 2016. "All Frames Created Equal are Not Identical: On the Structure of Kahneman and Tversky's Framing Effects," GREDEG Working Papers 2016-17, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    8. Dino Borie & Dorian Jullien, 2017. "Description-dependent Choices," Working Papers halshs-01651086, HAL.
    9. repec:eee:mateco:v:71:y:2017:i:c:p:63-73 is not listed on IDEAS
    10. repec:eee:matsoc:v:87:y:2017:i:c:p:11-21 is not listed on IDEAS

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