The Ladder Theory of Behavioral Decision Making

TL;DR

The paper introduces the Ladder Theory, a new behavioral decision-making framework that integrates prospect and image theories, providing better explanation and prediction of individual decisions in complex scenarios.

Contribution

It proposes the Ladder Theory, a novel model that enhances classical behavioral decision theories by incorporating subjective attribute preferences and multi-attribute decision strategies.

Findings

LT outperforms PT and IT in explaining decision behaviors

LT can encompass PT and IT as special cases

The model is validated through four real case comparisons

Abstract

We study individual decision-making behavioral on generic view. Using a formal mathematical model, we investigate the action mechanism of decision behavioral under subjective perception changing of task attributes. Our model is built on work in two kinds classical behavioral decision making theory: "prospect theory (PT)" and "image theory (IT)". We consider subjective attributes preference of decision maker under the whole decision process. Strategies collection and selection mechanism are induced according the description of multi-attributes decision making. A novel behavioral decision-making framework named "ladder theory (LT)" is proposed. By real four cases comparing, the results shows that the LT have better explanation and prediction ability then PT and IT under some decision situations. Furthermore, we use our model to shed light on that the LT theory can cover PT and IT ideally. It is the enrichment and development for classical behavioral decision theory and, it has positive theoretical value and instructive significance for explaining plenty of real decision-making phenomena. It may facilitate our understanding of how individual decision-making performed actually.