It is very rare to find in a single person both the qualities of a remarkable scientific mind and... more It is very rare to find in a single person both the qualities of a remarkable scientific mind and of a wonderful human being. With this tribute to Jean-Yves Jaffray, we hope to convince the reader of his outstanding creativity and vision, of the coherence of his work, and of its relevance for some topics in decision theory that are currently under lively debate. As a scientist, Jean-Yves Jaffray can be characterized by one main insight and one main concern. His main insight is that a sound decision theory must explicitly use all the information available to the decision maker. This information about events must further be treated in a strictly objective manner. In the models he proposed as a result, objective information can be disentangled from subjective attitudes with respect to this information. For that purpose, before asking how to represent preferences, one must wonder how to treat and represent the given information. Jean-Yves’ main concern in designing his models is that th...
In this paper, we ask three questions about reference-dependent preferences (RDP) : to what exten... more In this paper, we ask three questions about reference-dependent preferences (RDP) : to what extent can they be said to be irrational ? What is the mechanism that underlies reference dependence? How to design welfare improving policies when preferences are reference-dependent? As to the first question, we characterize three notions of rationality to assess the rationality of RDP and show that there is a sense in which they are rational. As to the second, we show that the effect of a shifting reference point is two-sided : first modifying the relevant criteria for choice and second modifying the desirability of an option. As to the third question we define a welfare ordering based on the comparison of the strength of the status quo bias and show how to relate it to the representation of preferences.
We suscribe to an account of framing-effects in decision theory in terms of an inference to a bac... more We suscribe to an account of framing-effects in decision theory in terms of an inference to a background informationa by the hearer when a speaker uses a certain frame while other equivalent frames were also available. This account was sketched by Craig McKenzie. We embed it in Bolker-Jeffrey decision model (or logic of action) - one main reason of this is that this latter model makes preferences bear on propositions. We can deduce a given anomaly or cognitive bias (namely framing-effects) in a formal decision theory. This leads to some philosophical considerations on the relationship between the rationality of preferences and the sensitivity to descriptions or labels of states of affairs (intensionality) in decision-making.
We investigate the effect of ambiguity and ambiguity attitude on the shape and properties of the ... more We investigate the effect of ambiguity and ambiguity attitude on the shape and properties of the optimal contract in an adverse selection model with a continuum of types, using the parametric model of ambiguity and ambiguity aversion called the NEO-additive model . We show that it necessarily features efficiency and a jump at the top and pooling at the bottom of the distribution. Conditional on the degree of ambiguity, the pooling section may or may not be supplemented by a separating section. As a result, ambiguity adversely affects the principal's ability to solve the adverse selection problem and therefore the least efficient types benefit from ambiguity with respect to risk. Conversely, ambiguity is
Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s&... more Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s'est mise, à un moment donné, à prendre davantage et mieux en compte les processus mentaux – voire neuronaux – qui président au traitement de l'information pertinente pour la prise de décision et qui accompagnent, déterminent et expliquent la prise de décision. Cette prise en compte
We argue, in the spirit of some of Jean-Yves Jaffray's work, that explicitly incorporating the in... more We argue, in the spirit of some of Jean-Yves Jaffray's work, that explicitly incorporating the information, however imprecise, available to the decision maker is relevant, feasible and fruitful. In particular, we show that it can lead us to know whether the decision maker has wrong beliefs and whether it matters or not, that it makes it possible to better model and analyze how the decision maker takes into account new information, even when this information is not an event and finally that it is crucial when attempting to identify and measure the decision maker's attitude toward imprecise information.
We aim at improving the classical explanation of the framing effect phenomenon, based on Prospect... more We aim at improving the classical explanation of the framing effect phenomenon, based on Prospect Theory by, first, making the reference point shifting that generates the phenomenon endogenous, and second, providing a theory of risky choice framing that accounts for the fundamental intuition that framing effects do not come from cognitive limitations of the subjects. We introduce a normative equivalence
Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch ge... more Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.
Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s&... more Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s'est mise, à un moment donné, à prendre davantage et mieux en compte les processus mentaux – voire neuronaux – qui président au traitement de l'information pertinente pour la prise de décision et qui accompagnent, déterminent et expliquent la prise de décision. Cette prise en compte suppose, bien entendu, la modification des modèles de décision, mais sans doute également un changement dans la démarche ui préside à la modélisation, moins tributaire de l'approche instrumentale inspirée de l'irréalisme méthodologique de Milton Friedman (1953) d'après laquelle le caractère réaliste des hypothèses d'un modèle importe peu du moment qu'il prédit correctement les comportements, et plus préoccupée d'une description fidèle des processus mentaux effectifs qui conduisent aux décisions. La tâche qui nous attend est donc double. Il s'agit d'abord de repérer chron...
The willingness-to-pay (WTP) and willingness-to-accept (WTA) disparity reported in a rich empiric... more The willingness-to-pay (WTP) and willingness-to-accept (WTA) disparity reported in a rich empirical literature suggests that people have only an imprecise idea of how valuable a good is to them. In this note, we provide axioms that formally relate this imprecision in the evaluation of a good to the imprecision in the utility function, in the sense that x is strictly preferred to y iff the WTP for x is larger than the WTA for y. The preference relation is therefore an interval order (Fishburn (1970)) with ``interval utility' equal to the WTP/WTA interval itself. Applications to preference for liquidity and the strength of the status quo bias are given.
We suscribe to an account of framing-effects in decision theory in terms of an inference to a bac... more We suscribe to an account of framing-effects in decision theory in terms of an inference to a background informationa by the hearer when a speaker uses a certain frame while other equivalent frames were also available. This account was sketched by Craig McKenzie. We embed it in Bolker-Jeffrey decision model (or logic of action) - one main reason of this is that this latter model makes preferences bear on propositions. We can deduce a given anomaly or cognitive bias (namely framing-effects) in a formal decision theory. This leads to some philosophical considerations on the relationship between the rationality of preferences and the sensitivity to descriptions or labels of states of affairs (intensionality) in decision-making.
In this paper, we ask three questions about reference-dependent preferences (RDP) : to what exten... more In this paper, we ask three questions about reference-dependent preferences (RDP) : to what extent can they be said to be irrational ? What is the mechanism that underlies reference dependence? How to design welfare improving policies when preferences are reference-dependent? As to the first question, we characterize three notions of rationality to assess the rationality of RDP and show
We present the leading hypotheses of a work in progress aiming at testing and comparing neural ac... more We present the leading hypotheses of a work in progress aiming at testing and comparing neural activities in the case of a cognitive illusion (the bat-and-ball illusion) and in the case of a typical instance of framing effects. We focus on contrasted answers linked to Stanovich's system 1 vs system 2. We expect to see such a contrast in the case of the bat-and-ball illusions but not in the case of framing-effects which cannot be called 'cognitive illusions' in the same sense. Another focus of interest in our study is about a possible "sense of rationality" experienced by subjects giving intuitive erroneous answers to cognitive tasks after significant reaction times. We try to consider in which sense data pointing to the existence of such feelings of irrationality could be experimentally relevant to the classification of cognitive illusions and biases.
ABSTRACT Based on experimental evidence, it is often said that one should give up the concept of ... more ABSTRACT Based on experimental evidence, it is often said that one should give up the concept of preference. In this paper, we show that the validity of this inference relies on an implicit assumption, the invariance principle (ip), according to which certain features of the objects of choice are irrelevant to the decision to be made. This assumption is usually confounded with a necessary assumption of any economic model, the faithfulness assumption, (f), which states that the language of the model is rich enough to describe the diversity of empirical observations. In order to clarify the situation, we claim that one must disentangle (f) and (ip). We show that this can be done thanks to the structure of decision problem with normative equivalence (dpne) that we introduce. We study the decision process associated to it and show that it involves the salience of attributes as the decisive element.
We develop a framework that allows us to state precisely the relationship between leading concept... more We develop a framework that allows us to state precisely the relationship between leading concepts of the theoretical and empirical research on reference-dependent preferences, namely the status quo bias, the endowment effect and the WTA/WTP gap. We show that a monetary version of the status quo bias is a necessary condition for the WTA/WTP gap, and show how to factor out the part of the gap due to income effects from the part of the gap due to the endowment effect. As a byproduct we show that reference-dependent phenomena are generated by reference-independent factors, i.e. an underlying reference-independent preference relation the properties of which are discussed at length.
We axiomatize a model of decision under objective ambiguity or imprecise risk. The decision maker... more We axiomatize a model of decision under objective ambiguity or imprecise risk. The decision maker forms a subjective (non necessarily additive) belief about the likelihood of probability distributions and computes the average expected utility of a given act with respect to this second order ...
It is very rare to find in a single person both the qualities of a remarkable scientific mind and... more It is very rare to find in a single person both the qualities of a remarkable scientific mind and of a wonderful human being. With this tribute to Jean-Yves Jaffray, we hope to convince the reader of his outstanding creativity and vision, of the coherence of his work, and of its relevance for some topics in decision theory that are currently under lively debate. As a scientist, Jean-Yves Jaffray can be characterized by one main insight and one main concern. His main insight is that a sound decision theory must explicitly use all the information available to the decision maker. This information about events must further be treated in a strictly objective manner. In the models he proposed as a result, objective information can be disentangled from subjective attitudes with respect to this information. For that purpose, before asking how to represent preferences, one must wonder how to treat and represent the given information. Jean-Yves’ main concern in designing his models is that th...
In this paper, we ask three questions about reference-dependent preferences (RDP) : to what exten... more In this paper, we ask three questions about reference-dependent preferences (RDP) : to what extent can they be said to be irrational ? What is the mechanism that underlies reference dependence? How to design welfare improving policies when preferences are reference-dependent? As to the first question, we characterize three notions of rationality to assess the rationality of RDP and show that there is a sense in which they are rational. As to the second, we show that the effect of a shifting reference point is two-sided : first modifying the relevant criteria for choice and second modifying the desirability of an option. As to the third question we define a welfare ordering based on the comparison of the strength of the status quo bias and show how to relate it to the representation of preferences.
We suscribe to an account of framing-effects in decision theory in terms of an inference to a bac... more We suscribe to an account of framing-effects in decision theory in terms of an inference to a background informationa by the hearer when a speaker uses a certain frame while other equivalent frames were also available. This account was sketched by Craig McKenzie. We embed it in Bolker-Jeffrey decision model (or logic of action) - one main reason of this is that this latter model makes preferences bear on propositions. We can deduce a given anomaly or cognitive bias (namely framing-effects) in a formal decision theory. This leads to some philosophical considerations on the relationship between the rationality of preferences and the sensitivity to descriptions or labels of states of affairs (intensionality) in decision-making.
We investigate the effect of ambiguity and ambiguity attitude on the shape and properties of the ... more We investigate the effect of ambiguity and ambiguity attitude on the shape and properties of the optimal contract in an adverse selection model with a continuum of types, using the parametric model of ambiguity and ambiguity aversion called the NEO-additive model . We show that it necessarily features efficiency and a jump at the top and pooling at the bottom of the distribution. Conditional on the degree of ambiguity, the pooling section may or may not be supplemented by a separating section. As a result, ambiguity adversely affects the principal's ability to solve the adverse selection problem and therefore the least efficient types benefit from ambiguity with respect to risk. Conversely, ambiguity is
Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s&... more Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s'est mise, à un moment donné, à prendre davantage et mieux en compte les processus mentaux – voire neuronaux – qui président au traitement de l'information pertinente pour la prise de décision et qui accompagnent, déterminent et expliquent la prise de décision. Cette prise en compte
We argue, in the spirit of some of Jean-Yves Jaffray's work, that explicitly incorporating the in... more We argue, in the spirit of some of Jean-Yves Jaffray's work, that explicitly incorporating the information, however imprecise, available to the decision maker is relevant, feasible and fruitful. In particular, we show that it can lead us to know whether the decision maker has wrong beliefs and whether it matters or not, that it makes it possible to better model and analyze how the decision maker takes into account new information, even when this information is not an event and finally that it is crucial when attempting to identify and measure the decision maker's attitude toward imprecise information.
We aim at improving the classical explanation of the framing effect phenomenon, based on Prospect... more We aim at improving the classical explanation of the framing effect phenomenon, based on Prospect Theory by, first, making the reference point shifting that generates the phenomenon endogenous, and second, providing a theory of risky choice framing that accounts for the fundamental intuition that framing effects do not come from cognitive limitations of the subjects. We introduce a normative equivalence
Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch ge... more Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.
Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s&... more Parler d'un tournant cognitif de la théorie économique de la décision suppose que celle-ci s'est mise, à un moment donné, à prendre davantage et mieux en compte les processus mentaux – voire neuronaux – qui président au traitement de l'information pertinente pour la prise de décision et qui accompagnent, déterminent et expliquent la prise de décision. Cette prise en compte suppose, bien entendu, la modification des modèles de décision, mais sans doute également un changement dans la démarche ui préside à la modélisation, moins tributaire de l'approche instrumentale inspirée de l'irréalisme méthodologique de Milton Friedman (1953) d'après laquelle le caractère réaliste des hypothèses d'un modèle importe peu du moment qu'il prédit correctement les comportements, et plus préoccupée d'une description fidèle des processus mentaux effectifs qui conduisent aux décisions. La tâche qui nous attend est donc double. Il s'agit d'abord de repérer chron...
The willingness-to-pay (WTP) and willingness-to-accept (WTA) disparity reported in a rich empiric... more The willingness-to-pay (WTP) and willingness-to-accept (WTA) disparity reported in a rich empirical literature suggests that people have only an imprecise idea of how valuable a good is to them. In this note, we provide axioms that formally relate this imprecision in the evaluation of a good to the imprecision in the utility function, in the sense that x is strictly preferred to y iff the WTP for x is larger than the WTA for y. The preference relation is therefore an interval order (Fishburn (1970)) with ``interval utility' equal to the WTP/WTA interval itself. Applications to preference for liquidity and the strength of the status quo bias are given.
We suscribe to an account of framing-effects in decision theory in terms of an inference to a bac... more We suscribe to an account of framing-effects in decision theory in terms of an inference to a background informationa by the hearer when a speaker uses a certain frame while other equivalent frames were also available. This account was sketched by Craig McKenzie. We embed it in Bolker-Jeffrey decision model (or logic of action) - one main reason of this is that this latter model makes preferences bear on propositions. We can deduce a given anomaly or cognitive bias (namely framing-effects) in a formal decision theory. This leads to some philosophical considerations on the relationship between the rationality of preferences and the sensitivity to descriptions or labels of states of affairs (intensionality) in decision-making.
In this paper, we ask three questions about reference-dependent preferences (RDP) : to what exten... more In this paper, we ask three questions about reference-dependent preferences (RDP) : to what extent can they be said to be irrational ? What is the mechanism that underlies reference dependence? How to design welfare improving policies when preferences are reference-dependent? As to the first question, we characterize three notions of rationality to assess the rationality of RDP and show
We present the leading hypotheses of a work in progress aiming at testing and comparing neural ac... more We present the leading hypotheses of a work in progress aiming at testing and comparing neural activities in the case of a cognitive illusion (the bat-and-ball illusion) and in the case of a typical instance of framing effects. We focus on contrasted answers linked to Stanovich's system 1 vs system 2. We expect to see such a contrast in the case of the bat-and-ball illusions but not in the case of framing-effects which cannot be called 'cognitive illusions' in the same sense. Another focus of interest in our study is about a possible "sense of rationality" experienced by subjects giving intuitive erroneous answers to cognitive tasks after significant reaction times. We try to consider in which sense data pointing to the existence of such feelings of irrationality could be experimentally relevant to the classification of cognitive illusions and biases.
ABSTRACT Based on experimental evidence, it is often said that one should give up the concept of ... more ABSTRACT Based on experimental evidence, it is often said that one should give up the concept of preference. In this paper, we show that the validity of this inference relies on an implicit assumption, the invariance principle (ip), according to which certain features of the objects of choice are irrelevant to the decision to be made. This assumption is usually confounded with a necessary assumption of any economic model, the faithfulness assumption, (f), which states that the language of the model is rich enough to describe the diversity of empirical observations. In order to clarify the situation, we claim that one must disentangle (f) and (ip). We show that this can be done thanks to the structure of decision problem with normative equivalence (dpne) that we introduce. We study the decision process associated to it and show that it involves the salience of attributes as the decisive element.
We develop a framework that allows us to state precisely the relationship between leading concept... more We develop a framework that allows us to state precisely the relationship between leading concepts of the theoretical and empirical research on reference-dependent preferences, namely the status quo bias, the endowment effect and the WTA/WTP gap. We show that a monetary version of the status quo bias is a necessary condition for the WTA/WTP gap, and show how to factor out the part of the gap due to income effects from the part of the gap due to the endowment effect. As a byproduct we show that reference-dependent phenomena are generated by reference-independent factors, i.e. an underlying reference-independent preference relation the properties of which are discussed at length.
We axiomatize a model of decision under objective ambiguity or imprecise risk. The decision maker... more We axiomatize a model of decision under objective ambiguity or imprecise risk. The decision maker forms a subjective (non necessarily additive) belief about the likelihood of probability distributions and computes the average expected utility of a given act with respect to this second order ...
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