Abstract
Alternative descriptions of a decision problem often give rise to different preferences, contrary to the principle of invariance that underlines the rational theory of choice. Violations of this theory are traced to the rules that govern the framing of decision and to the psychological principles of evaluation embodied in prospect theory. Invariance and dominance are obeyed when their application is transparent and often violated in other situations. Because these rules are normatively essential but descriptively invalid, no theory of choice can be both normatively adequate and descriptively accurate.
This work has appeared in The Journal of Business, 1986, vol. 59(4), pt.2, pp. 251 – 278
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Tversky, A., Kahneman, D. (1989). Rational Choice and the Framing of Decisions. In: Karpak, B., Zionts, S. (eds) Multiple Criteria Decision Making and Risk Analysis Using Microcomputers. NATO ASI Series, vol 56. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-74919-3_4
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