Theory and Decision 77 (2):183-196 (2014)

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Abstract
This paper presents an axiomatic framework for the priority heuristic, a model of bounded rationality in Selten’s Bounded rationality: the adaptive toolbox, 2001) spirit of using empirical evidence on heuristics. The priority heuristic predicts actual human choices between risky gambles well. It implies violations of expected utility theory such as common consequence effects, common ratio effects, the fourfold pattern of risk taking and the reflection effect. We present an axiomatization of a parameterized version of the heuristic which generalizes the heuristic in order to account for individual differences and inconsistencies. The axiomatization uses semiorders, which have an intransitive indifference part and a transitive strict preference component. The axiomatization suggests new testable predictions of the priority heuristic and makes it easier for theorists to study the relation between heuristics and other axiomatic theories such as cumulative prospect theory.
Keywords Bounded rationality  Axiomatization  Priority heuristic  EUT  EVT
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DOI 10.1007/s11238-013-9393-0
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References found in this work BETA

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The Foundations of Statistics.Leonard J. Savage - 1959 - Synthese 11 (1):86-89.

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