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Framing reference points: the effect of integration and segregation on dynamic inconsistency

Framing reference points: the effect of integration and segregation on dynamic inconsistency Dynamic inconsistency reflects a prediction bias where decision makers fail to follow their plans simply because they experience outcomes on which their plan was based. Specifically, after experiencing an anticipated gain in one gamble, decision makers reject a second gamble they had planned to accept. The opposite pattern is found with losses. A common account of these findings is that prior outcomes are segregated during planned choices and are integrated only after being experienced. According to a derived “computational” hypothesis, integration of prior outcomes at the planning stage should reduce dynamic inconsistency while segregation should increase it. A “descriptive” meaning of segregation and integration offers the opposite hypothesis. An experiment that framed planned choices to encourage either integration or segregation of prior outcomes indicated that dynamic inconsistency persists in both framing conditions. We suggest alternative explanations for dynamic inconsistency, and discuss the difficulty of bridging between predicted and actual preferences. Copyright © 2005 John Wiley & Sons, Ltd. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Behavioral Decision Making Wiley

Framing reference points: the effect of integration and segregation on dynamic inconsistency

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References (23)

Publisher
Wiley
Copyright
Copyright © 2005 John Wiley & Sons, Ltd.
ISSN
0894-3257
eISSN
1099-0771
DOI
10.1002/bdm.496
Publisher site
See Article on Publisher Site

Abstract

Dynamic inconsistency reflects a prediction bias where decision makers fail to follow their plans simply because they experience outcomes on which their plan was based. Specifically, after experiencing an anticipated gain in one gamble, decision makers reject a second gamble they had planned to accept. The opposite pattern is found with losses. A common account of these findings is that prior outcomes are segregated during planned choices and are integrated only after being experienced. According to a derived “computational” hypothesis, integration of prior outcomes at the planning stage should reduce dynamic inconsistency while segregation should increase it. A “descriptive” meaning of segregation and integration offers the opposite hypothesis. An experiment that framed planned choices to encourage either integration or segregation of prior outcomes indicated that dynamic inconsistency persists in both framing conditions. We suggest alternative explanations for dynamic inconsistency, and discuss the difficulty of bridging between predicted and actual preferences. Copyright © 2005 John Wiley & Sons, Ltd.

Journal

Journal of Behavioral Decision MakingWiley

Published: Jul 1, 2005

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