The DOI matches its Crossref record; 42 of the 42 references it cites were found in a registry or an index.
Narrow Bracketing and Dominated Choices
Abstract
We show that any decision maker who “narrowly brackets” (evaluates decisions separately) and does not have constant-absolute-risk-averse preferences will make a first-order stochastically dominated combined choice in some simple pair of independent binary decisions. We also characterize the preference-contingent monetary cost from this mistake. Empirically, in a real-stakes laboratory experiment that replicates Tversky and Kahneman's (1981) experiment, 28 percent of participants choose dominated combinations. In a representative survey eliciting hypothetical large-stakes choices, higher proportions do so. Violation rates vary little with personal characteristics. Average preferences are prospect-theoretic, with an estimated 89 percent of people bracketing narrowly. (JEL D12, D81)
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Citations
Cites
Prospect Theory: An Analysis of Decision under Risk
Kahneman, D., & Tversky, A. (1979) · Econometrica · doi:10.2307/1914185 · Cited by 48,524
Prospect theory: An analysis of decision under risk
Kahneman, D., & Tversky, A. (1988) · Decision, Probability and Utility · doi:10.1017/cbo9780511609220.014 · Cited by 32,474
The Framing of Decisions and the Psychology of Choice
Tversky, A., & Kahneman, D. (1981) · Science · doi:10.1126/science.7455683 · Cited by 18,497 · cited 7×
“In the three treatments with two binary choices, we maintained the same order as in Tversky and Kahneman (1981). 15 In the second part, we tried out di¤erent lottery-choice problems that also addressed narrow-bracketing issues.”
InfluentialAdvances in prospect theory: Cumulative representation of uncertainty
Tversky, A., & Kahneman, D. (1992) · Journal of Risk and Uncertainty · doi:10.1007/bf00122574 · Cited by 15,467
Jeffreys, H., Moran, P. A. P., & Chatfield, C. (1922) · Nature · doi:10.1093/oso/9780198503682.001.0001 · Cited by 7,878
Risk Aversion and Incentive Effects
Holt, C. A., & Laury, S. K. (2002) · American Economic Review · doi:10.1257/000282802762024700 · Cited by 5,939
Cognitive Reflection and Decision Making
Frederick, S. (2005) · Journal of Economic Perspectives · doi:10.1257/089533005775196732 · Cited by 5,256
A Model of Reference-Dependent Preferences
Koszegi, B., & Rabin, M. (2006) · The Quarterly Journal of Economics · doi:10.1093/qje/121.4.1133 · Cited by 2,728
Self-citationMyopic Loss Aversion and the Equity Premium Puzzle
Benartzi, S., & Thaler, R. H. (1995) · The Quarterly Journal of Economics · doi:10.2307/2118511 · Cited by 2,487
Developments in Non-Expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk
Starmer, C. (2000) · Journal of Economic Literature · doi:10.1257/jel.38.2.332 · Cited by 1,899
Cited by
Psychology and Economics: Evidence from the Field
DellaVigna, S. (2009) · Journal of Economic Literature · doi:10.1257/jel.47.2.315 · Cited by 2,365
Are Risk Aversion and Impatience Related to Cognitive Ability?
Dohmen, T., Falk, A., Huffman, D., & Sunde, U. (2010) · American Economic Review · doi:10.1257/aer.100.3.1238 · Cited by 1,332
WHO IS ‘BEHAVIORAL’? COGNITIVE ABILITY AND ANOMALOUS PREFERENCES
Benjamin, D. J., Brown, S. A., & Shapiro, J. M. (2013) · Journal of the European Economic Association · doi:10.1111/jeea.12055 · Cited by 690
Reference-Dependent Consumption Plans
Kőszegi, B., & Rabin, M. (2009) · American Economic Review · doi:10.1257/aer.99.3.909 · Cited by 586
Self-citationPoverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday
Carvalho, L. S., Meier, S., & Wang, S. W. (2016) · American Economic Review · doi:10.1257/aer.20140481 · Cited by 506
Metadata
- Authors
- Rabin, M., & Weizsäcker, G.
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2009-08-01
- Volume
- 99
- Issue
- 4
- Pages
- 1508-1543
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W2141292470
- Cited by
- 257
- References
- 42
- FWCI
- 8.60
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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