Decision Making, Bias
Biases in decision making are identified as patterns of choice behavior that violate normative theory of choice allocation.
According to the axioms frequently used in economic theory, a rational decision maker is an agent who makes consistent choices over time, and therefore exhibits stable preferences (Samuelson 1938; Friedman and Savage 1948, 1952). Importantly, the rationality assumption does not prescribe that the decision maker should always optimize her objective outcome, e.g., her monetary payoff, but it does prescribe that an individual should behave consistently, given the assumption of stable preferences. This rationality assumption has been applied to both human and animal behavior (Kacelnik 2006). However, both in the human and animal literature, numerous examples of violations of economic rationality, i.e., biases in decision making, can be found (Kalenscher and Van Wingerden 2011).
Present Bias and Time-Inconsistent Preferences
KeywordsChoice Behavior Loss Aversion Framing Effect Reward Magnitude Loss Frame
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