Framing Effects as Violations of Extensionality
Bourgeois-Gironde , Sacha
Giraud , Raphaël
- Publisher: Springer Verlag
information processing | [ SHS.ECO ] Humanities and Social Sciences/Economies and finances | framing-effects,extensionality,information processing,Bolker-Jeffrey decision model,biseparable preferences | Bolker-Jeffrey decision model | JEL : Z - Other Special Topics | biseparable preferences | extensionality | framing-effects | [ SHS.PHIL.EPISTEMO ] Humanities and Social Sciences/Philosophy/domain_shs.phil.epistemo
Framing effects occur when different descriptions of the same decision problem give rise to divergent decisions. They can be seen as a violation of the decisiontheoretic version of the principle of extensionality (PE). The PE in logic means that two logically equivalent sentences can be substituted salva veritate. We explore what this notion of extensionality becomes in decision contexts. Violations of extensionality may have rational grounds. Based on some ideas proposed by the psychologist Craig McKenzie and colleagues, we contend that framing effects are justified when the selection of one particular frame conveys choice relevant information. We first discuss this idea from a philosophical point of view, and proceed next to formalize it first in the context of the Bolker–Jeffrey decision theory. Finally, we extend the previous analysis to non-expected utility theories using the Biseparable Preference model introduced by Ghirardato and Marinacci (2001) and therefore show that the analysis is independent of the assumptions of Bayesian decision theory.