Framing Contingencies

Joint with: David S. Ahn

We introduce a model of decision making under uncertainty which incorporates framing effects for how contingencies are described. The primitive is a family of preferences,

indexed by partitions of the state space. Each partition corresponds to a description of the state space. We axiomatically characterize the following partition-dependent expected utility representation. The decision maker has a nonadditive set function over events. She then computes expected utility with respect to her partition-dependent belief, which weights explicitly listed events. One interpretation of the model is in terms of unforeseen contingencies. We propose definitions for the events which are completely foreseen or unforeseen by decision maker and study their properties.

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