ASFEE 6 in Paris

Salience Weighted Utility and the Etiology of Choice
Jonathan Leland  1@  
1 : National Science Foundation  (NSF)  -  Website
4201 Wilson Boulevard, Arlington, Virginia 22230 -  United States

Many decisions are influenced by the framing of alternatives. However, little progress has been made in modeling such effects. In this paper, we introduce a definition of a choice presentation and a model of salience weighted utility over presentations (SWUP) which provides a calculus for analyzing the impact of framing on choice. We show that SWUP predicts deep parallels between risky and intertemporal choice as arising from the same basic properties of human salience perception. We apply SWUP to explain some major framing effects in the literature, as well as other commonly observed features of risk and time preferences.

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