IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

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

  • Kobi Kriesler
  • Shmuel Nitzan

    ()

    (Department of Economics, Bar Ilan University)

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.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.biu.ac.il/soc/ec/wp/2009-17.pdf
File Function: Working paper
Download Restriction: no

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

as
in new window

Length:
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:biu:wpaper:2009-17
Contact details of provider: Postal: Faculty of Social Sciences, Bar Ilan University 52900 Ramat-Gan
Phone: Phone: +972-3-5318345
Fax: +972-3-7384034
Web page: http://www.biu.ac.il/soc/ec
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Chateauneuf, Alain & Wakker, Peter, 1999. "An Axiomatization of Cumulative Prospect Theory for Decision under Risk," Journal of Risk and Uncertainty, Springer, vol. 18(2), pages 137-45, August.
  2. 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.
  3. Loomes, Graham & Starmer, Chris & Sugden, Robert, 1989. "Preference Reversal: Information-Processing Effect or Rational Non-transitive Choice?," Economic Journal, Royal Economic Society, vol. 99(395), pages 140-51, Supplemen.
  4. Rubinstein, Ariel, 1988. "Similarity and decision-making under risk (is there a utility theory resolution to the Allais paradox?)," Journal of Economic Theory, Elsevier, vol. 46(1), pages 145-153, October.
  5. Loomes, Graham, 1999. "Some Lessons from Past Experiments and Some Challenges for the Future," Economic Journal, Royal Economic Society, vol. 109(453), pages F35-45, February.
  6. Nakamura, Yutaka, 1998. "Skew-symmetric additive representations of preferences," Journal of Mathematical Economics, Elsevier, vol. 30(3), pages 367-387, October.
  7. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
  8. Paul Slovic & Sarah Lichtenstein, 1973. "Response-induced reversals of preference in gambling: An extended replication in las vegas," Framed Field Experiments 00169, The Field Experiments Website.
  9. Grether, David M. & Plott, Charles R., . "Economic Theory of Choice and the Preference Reversal Phenomenon," Working Papers 152, California Institute of Technology, Division of the Humanities and Social Sciences.
  10. Sugden Robert, 1993. "An Axiomatic Foundation for Regret Theory," Journal of Economic Theory, Elsevier, vol. 60(1), pages 159-180, June.
  11. Fishburn, Peter C., 1990. "Skew symmetric additive utility with finite states," Mathematical Social Sciences, Elsevier, vol. 19(2), pages 103-115, April.
  12. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages S251-78, October.
  13. Humphrey, Steven J, 2001. "Non-Transitive Choice: Event-Splitting Effects or Framing Effects?," Economica, London School of Economics and Political Science, vol. 68(269), pages 77-96, February.
  14. Loomes, Graham & Starmer, Chris & Sugden, Robert, 1991. "Observing Violations of Transitivity by Experimental Methods," Econometrica, Econometric Society, vol. 59(2), pages 425-39, March.
  15. Humphrey, Steven J., 2000. "The common consequence effect: testing a unified explanation of recent mixed evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 41(3), pages 239-262, March.
  16. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-24, December.
  17. Machina, Mark J, 1987. "Choice under Uncertainty: Problems Solved and Unsolved," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 121-54, Summer.
  18. Fishburn, P.C., 1984. "SSB Utility theory: an economic perspective," Mathematical Social Sciences, Elsevier, vol. 8(1), pages 63-94, August.
  19. Starmer, Chris & Sugden, Robert, 1998. "Testing Alternative Explanations of Cyclical Choices," Economica, London School of Economics and Political Science, vol. 65(259), pages 347-61, August.
  20. Wakker, P.P. & Thaler, R.H. & Tversky, A., 1997. "Probabilistic insurance," Discussion Paper 1997-35, Tilburg University, Center for Economic Research.
  21. Uzi Segal, 1986. "Probabilistic Insurance and Anticipated Utility," UCLA Economics Working Papers 390, UCLA Department of Economics.
  22. Wakker, Peter P & Thaler, Richard H & Tversky, Amos, 1997. "Probabilistic Insurance," Journal of Risk and Uncertainty, Springer, vol. 15(1), pages 7-28, October.
  23. Fishburn, Peter C, 1987. "Reconsiderations in the Foundations of Decision under Uncertainty," Economic Journal, Royal Economic Society, vol. 97(388), pages 825-41, December.
  24. Wakker, Peter & Tversky, Amos, 1993. " An Axiomatization of Cumulative Prospect Theory," Journal of Risk and Uncertainty, Springer, vol. 7(2), pages 147-75, October.
  25. Loomes, Graham & Sugden, Robert, 1987. "Some implications of a more general form of regret theory," Journal of Economic Theory, Elsevier, vol. 41(2), pages 270-287, April.
  26. Fishburn, P. C., 1984. "SSB utility theory and decision-making under uncertainty," Mathematical Social Sciences, Elsevier, vol. 8(3), pages 253-285, December.
  27. Harless, David W, 1992. "Actions versus Prospects: The Effect of Problem Representation on Regret," American Economic Review, American Economic Association, vol. 82(3), pages 634-49, June.
  28. L. Robin Keller, 1985. "The Effects of Problem Representation on the Sure-Thing and Substitution Principles," Management Science, INFORMS, vol. 31(6), pages 738-751, June.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:biu:wpaper:2009-17. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Department of Economics)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.