Economics at your fingertips  

Regret Theory and Salience Theory: Total Strangers, Distant Relatives or Close Cousins?

Fabian Herweg and Daniel Müller

No 7445, CESifo Working Paper Series from CESifo Group Munich

Abstract: Two non-expected-utility-theory approaches to model decision making under risk are regret theory (Loomes and Sugden, 1982; Bell, 1982) and salience theory (Bordalo, Gennaioli, and Shleifer, 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 the two theories and show that salience theory is a special case of regret theory. Moreover, we trace out the relationship be- tween diminishing sensitivity of the salience function and concavity of the choiceless utility function with regard to behavioral implications.

Keywords: choice under risk; regret theory; salience theory (search for similar items in EconPapers)
JEL-codes: D81 D91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-mic and nep-upt
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Group Munich Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().

Page updated 2019-11-09
Handle: RePEc:ces:ceswps:_7445