Framing-Based Choice: A Model of Decision-Making Under Risk

In this study we propose an axiomatic theory of decision-making under risk that is based on a new approach to the modeling of framing that focuses on the subjective statistical dependence between prizes of compared lotteries. Unlike existing models that allow objective statistical dependence, as in Regret Theory, in our model the emphasis is on alternative subjective statistical dependence patterns that are induced by alternative descriptions of the lotteries, i.e., by alternative framing. A distinct advantage of the proposed general descriptive model of choice is its ability to adequately explain a wide variety of behaviors and, in particular, several well-known paradoxes of different types.framing, statistical dependence, non-expected utility, expected value of lottery interchange

The influence of caffeine on energy content of sugar-sweetened beverages : the caffeine–calorie effect

Background/Objectives: Caffeine is a mildly addictive psychoactive chemical and controversial additive to sugar-sweetened beverages (SSBs). The objective of this study is to assess if removal of caffeine from SSBs allows co-removal of sucrose (energy) without affecting flavour of SSBs, and if removal of caffeine could potentially affect population weight gain. Subjects/Methods: The research comprised of three studies; study 1 used three-alternate forced choice and paired comparison tests to establish detection thresholds for caffeine in water and sucrose solution (subjects, n ¼ 63), and to determine if caffeine suppressed sweetness. Study 2 (subjects, n ¼ 30) examined the proportion of sucrose that could be co-removed with caffeine from SSBs without affecting the flavour of the SSBs. Study 3 applied validated coefficients to estimate the impact on the weight of the United States population if there was no caffeine in SSBs. Results: Detection threshold for caffeine in water was higher (1.09±0.08 mM) than the detection threshold for caffeine in sucrose solution (0.49 ± 0.04 mM), and a paired comparison test revealed caffeine significantly reduced the sweetness of sucrose (Po0.001). Removing caffeine from SSBs allowed co-removal of 10.3% sucrose without affecting flavour of the SSBs, equating to 116 kJ per 500 ml serving. The effect of this on body weight in adults and children would be 0.600 and 0.142 kg, which are equivalent to 2.08 and 1.10 years of observed existing trends in weight gain, respectively. Conclusion: These data suggest the extra energy in SSBs as a result of caffeine's effect on sweetness may be associated with adult and child weight gain

On adaptation, life-extension possibilities and the demand for health

A good health is important for having a good life. This is supported by surveys on happiness. However, at least after a certain age, the health state deteriorates naturally over time due to ageing. Nevertheless, research reports show that old people in average are satisfied with their health conditions. This and other empirical evidence indicate that individuals adapt to poorer health conditions. But how will this adaptation influence the demand for health services? Gjerde, Grepperud and Kverndokk will in this paper analyse the impacts of adaptation to a falling health state on the demand for health and medical care. This is done by integrating adaptation processes in the pure consumption model of Grossman. The authors will modify the consumption-model in another direction by introducing an uncertain lifetime. Model simulations show that adaptation affects the health variables by lowering the incentives to invest in health, as well as smoothening the optimal health stock path over the life cycle. Whether or not the risk of mortality is an object of choice has important effects on the joint development of the health variables.Grossman; Demand for health; Adaptation; Life extension; Ageing.

A risky challenge for intransitive preferences

Philosophers have spent a great deal of time debating whether intransitive preferences can be rational. I present a risky decision that poses a challenge for the defender of intransitivity. The defender of intransitivity faces a trilemma and must either: (i) reject the rationality of intransitive preferences, (ii) deny State-wise Dominance, or (iii) accept the bizarre verdict that you can be required to pay to relabel the tickets of a fair lottery. If we take the first horn, then we have a synchronic refutation of intransitivity, an improvement on widely criticized diachronic arguments. I sketch possible responses that may rescue intransitivity and argue that each response is possible but generates an explanatory debt. I conclude by showing how the challenge here clarifies the foundations of decision theory without transitivity, conditional on some explanatory debt being payable

Smoking and Health Investments: Impacts of Health Adaptation and Damage Reversibility

In the present paper we examine how different sets of beliefs about the health effects of smoking would influence a rational smoker. By embedding the rational addiction theory in a Grossman model of health investment modified to take account of psychological adaptation effects, we present a model of a rational addict that allows us to explicitly specify beliefs about a direct and indirect effect on both death risk and utility. This allows us to study how a rational addict would smoke with different beliefs of cancer risks, and with or without the well-documented ability to adapt to health changes. Numerical simulation results illustrate a number of different incentives that influence the smoking paths and health investments under the various beliefs, and suggests that beliefs have different impacts at different ages, providing a richer set of dynamics than might initially be expected.Rational addiction; Demand for health; Adaptation; Risk; Life extension

Cognition, optimism and the formation of age-dependent survival beliefs

This paper investigates the roles psychological biases play in empirically estimated deviations between subjective survival beliefs (SSBs) and objective survival probabilities (OSPs). We model deviations between SSBs and OSPs through age-dependent inverse S-shaped probability weighting functions (PWFs), as documented in experimental prospect theory. Our estimates suggest that the implied measures for cognitive weakness, likelihood insensitivity, and those for motivational biases, relative pessimism, increase with age. We document that direct measures of cognitive weakness and motivational attitudes share these trends. Our regression analyses confirm that these factors play strong quantitative roles in the formation of subjective survival beliefs. In particular, cognitive weakness is an increasingly important contributor to the overestimation of survival chances in old age

Empirical Tests of Intransitivity Predicted by Models of Risky Choice

Recently proposed models of risky choice imply systematic violations of transitivity of preference. Five studies explored whether people show patterns of intransitivity predicted by four descriptive models. To distinguish ?true? violations from those produced by ?error,? a model was fit in which each choice can have a different error rate and each person can have a different pattern of true preferences that need not be transitive. Error rate for a choice is estimated from preference reversals between repeated presentations of the same choice. Results of five studies showed that very few people repeated intransitive patterns. We can retain the hypothesis that transitivity best describes the data of the vast majority of participants. --decision making,errors,gambling effect,reference points,regret,transitivity