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Framing-based Choice: A Model of Decision-making Under Risk

Author

Listed:
  • Kobi Kriesler

    (Bar-Ilan University)

  • Shmuel Nitzan

    (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.

Suggested Citation

  • Kobi Kriesler & Shmuel Nitzan, 2009. "Framing-based Choice: A Model of Decision-making Under Risk," Korean Economic Review, Korean Economic Association, vol. 25, pages 65-89.
    • Handle: RePEc:kea:keappr:ker-20090630-25-1-03
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Framing; Statistical Dependence; Non-expected Utility; Expected Value of Lottery Interchange;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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