Framing as Path-Dependence
A “framing” effect occurs when an agent’s choices are not invariant under changes in the way a choice problem is formulated, e.g. changes in the way the options are described (violation of description invariance) or in the way preferences are elicited (violation of procedure invariance). In this paper we examine precisely which classical conditions of rationality it is whose non-satisfaction may lead to framing effects. We show that (under certain conditions), if (and only if) an agent's initial dispositions on a set of propositions are “implicitly inconsistent”, her decisions may be “path-dependent”, i.e. dependent on the order in which the propositions are considered. We suggest that different ways of framing a choice problem may induce the order in which relevant propositions are considered and hence affect the decision made. This theoretical explanation suggests some observations about human psychology which are consistent with those made by psychologists and provides a unified framework for explaining violations of description and procedure invariance.
|Date of creation:||21 Nov 2002|
|Note:||Type of Document - PDF; prepared on Windows; pages: 18. Oxford University Department of Economics Series Ref: 124|
|Contact details of provider:|| Web page: http://econwpa.repec.org|
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.:
- Arrow, Kenneth J, 1982. "Risk Perception in Psychology and Economics," Economic Inquiry, Western Economic Association International, vol. 20(1), pages 1-9, January.
- Amos Tversky & Daniel Kahneman, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Levine's Working Paper Archive
7656, David K. Levine.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpmi:0211016. 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: (EconWPA)
If references are entirely missing, you can add them using this form.