Speaker: Attention Theory

Time: 19:00-20:30 p.m., May 8, 2023, GMT+8

Venue: Chengze Campus No. 345 Room (send mail to lujing@nsd.pku.edu.cn to obtain the Zoom Meeting link)

Abstract:

We model the role of attention in decision making under risk and uncertainty from the perspective of the decision maker as a cognitive miser, and arrive at the utility of a lottery through potentially volatile attention-dependent decision weights. The resulting Attention Theory (AT) exhibits continuity inprobability weighting and can account for a range of loss-gain attitude between loss aversion and gain seeking. When top-down attention is stable and consequentialist, AT can account for Allais behavior, fourfold pattern of risk attitude, and disjunction effect. Under volatile consequentialist attention, AT encompasses multiple attention functions and can exhibit ambiguity aversion, discontinuity in valuation from event splitting, and uncertainty effects. In binary choice, when the bivariate attention function is symmetric, AT reduces to Salience Theory and overlaps with skew symmetric bilinear (SSB) correlation preference along with generalized Regret Theory. AT goes beyond SSB correlation preference under asymmetric attention which is necessary and sufficient for Allais behavior in the correlated common-consequence problem. In the presence of substantial non-consequentialist stimuli through bottom-up salience, AT delivers context dependent choice including volatility in loss-gain attitude, source preference, and default bias. Moreover, choice behavior may appear random when the attention function varies with specific stimuli or when the stimuli are themselves stochastic.

Biography:

Chew Soo Hong is a Professor at the Southwestern University of Finance and Economics where he directs its China Center for Behavioral Economics and Finance. Chew is among the pioneers in axiomatic non-expected utility models and has been pursuing research in the biology of decision making. He is a fellow of the Econometric Society, which awarded him the Leonard J. Savage thesis prize, and of the Society for the Advancement of Economic Theory. Chew is Emeritus Professor at the National University of Singapore and has previously taught at HKUST, UC Irvine, Johns Hopkins, and University of Arizona. He has published in well-regarded journals in economics such as Econometrica, JPE, REStud, EJ, JEEA, and JET as well as more biology-oriented ones including Neuron, PNAS, E-BioMedicine, Neuroscience Science and Behavioral Review, Neuroimage, PLoS ONE, and PRSB.

Source: National School of Development