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Full-Text Articles in Social and Behavioral Sciences
Salience, Framing, And Decisions Under Risk, Uncertainty, And Time, Jonathan W. Leland, Mark Schneider
Salience, Framing, And Decisions Under Risk, Uncertainty, And Time, Jonathan W. Leland, Mark Schneider
ESI Working Papers
We propose a comparative model of decision making under risk, uncertainty, and time, in which large differences in payoffs and probabilities or dates of receipt are perceived as salient and overweighted in the evaluation process. The predictions of the model depend on what differences are compared across alternatives which, in turn, depends on how the choice is framed. We formalize a class of matrix-based frames which applies to decisions under risk, uncertainty, and time, and we specify two important types of frames within this class: minimal frames which provide the simplest representation of choice alternatives, and transparent frames which make …
Axioms For Salience Perception, Jonathan W. Leland, Mark Schneider
Axioms For Salience Perception, Jonathan W. Leland, Mark Schneider
ESI Working Papers
Models of salience-based choice have become popular in recent years, although there is still no known set of simple conditions or axioms which implies the existence of a salience function. In this paper, we provide simple and natural axioms that characterize the general class of salience functions. As an application we consider a salience-based model of decision making and show that within that setup the fourfold pattern of risk attitudes is a general property of a salience function and that the properties producing that pattern also account for other anomalies involving risky and intertemporal choice.