The Effect of Behavioural Biases on Financial Decisions
  • All Biases
  • Categories
    • Heuristics and Judgemental Biases
    • Choices: Framing and References
    • Social Factors
  • About

Frame Dependence

Our preference between identical options changes depending on how the problem is presented.

choices

It’s when our choices change depending on the framing of a problem; in other words, options are not always evaluated in absolute terms but relative to the way they are presented.

Context Dependence
Context dependence describes how the same option can be more or less attractive depending on what else is in the choice set. It can further be distinguished into:
Narrow Framing
It’s the tendency to evaluate events in isolation, rather than considering the whole picture.
Repeated Gambles
Repeated gambles refer to the failure to account for how individual decisions aggregate over time as cumulative sums. For example, each choice may seem trivial in isolation…
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