Can the Seesaw Model Depict the Certainty Effect?

Marek Jenöffy ()
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Marek Jenöffy: Büro am Carlsplatz

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Abstract: The Signal-Preference Model (Seesaw Model) has provided an algorithm for modeling endogenous preferences using the insight of ancient rhetoric and the empirical results of communications research. It predicts how preferences form or can be altered. This paper examines how the Seesaw Model performs in the framework of economic decision theory. The results of the Seesaw Model are compared with Expected Utility Theory, Bayes, and Prospect Theory. I use empirical data gained with students of Humboldt University of Berlin as well as data from Kahneman and Tversky. Surprisingly this model of endogenous preferences does well in solving the certainty effect paradox and the reflection effect paradox. It may be considered that the Seesaw Model produces better results in predicting human decisions than traditional Expected Utility Theory or Prospect Theory. Additionally, the model can not only measure existing preferences but can also predict under which circumstances preferences can be altered.

Keywords: Information; Uncertainty; Preferences; Communication; Preference Formation (search for similar items in EconPapers)
Date: 2023-06-21
New Economics Papers: this item is included in nep-upt
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