A comparison of regret theory and salience theory for decisions under risk

Fabian Herweg () and Daniel Müller

Journal of Economic Theory, 2021, vol. 193, issue C

Abstract: Two non-transitive theories to model decision making under risk are regret theory (Loomes and Sugden, 1982, 1987) and salience theory (Bordalo et al., 2012). While the psychological underpinning of these two approaches is different, the models share the assumption that within-state comparisons of outcomes across choice options are a key determinant of choice behavior. We investigate the overlap between these theories and show that original regret theory (Loomes and Sugden, 1982) is a special case of salience theory (Bordalo et al., 2012), which itself is a special case of generalized regret theory (Loomes and Sugden, 1987).

Keywords: Choice under risk; Regret theory; Salience theory (search for similar items in EconPapers)
JEL-codes: D81 D91 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: A Comparison of Regret Theory and Salience Theory for Decisions under Risk (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:193:y:2021:i:c:s0022053121000430

DOI: 10.1016/j.jet.2021.105226

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