Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2017

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Framing and Salience: Regional Preference

Andrew Ellis*, Yusufcan Masatlioglu

Last modified: 2017-04-18

Abstract


This paper studies the hypothesis that framing acts to alter the salience of different characteristics of the alternative. We propose a novel model, \emph{regional preference model (RPM)}, where the framing of the decision problem affects the salience of a product through the region in which it lies, and the salience in turn affects the decision maker's perceived evaluation thereof. RPM accounts for diverse sets of evidence that are anomalous from the traditional rational perspective.  Our general framework encompasses the loss aversion model of Tversky and Kahnemean (1991), the salient thinking model of Bordalo et al (2013), and the status quo bias model of Masatlioglu and Ok (2005) and fulfills the challenge of integrating these theories into one cohesive and general model of salience. Finally, we provide a behavioral foundation for  the salient thinking model.