Salience in Choice Under Risk: An Experimental Investigation

Abstract

In choosing between lotteries, Bordalo, Gennaioli, and Shleifer (2012) postulate agents over-weight states that are more salient. We manipulate the correlation between lotteries to test if changes in behavior predicted by salience obtain. Under highly controlled experimental conditions, and contrary to salience theory, we find mixed evidence that correlation affects choice behavior. The evidence in favor of salience improves when we manipulate the choice architecture to make the correlation more apparent.

Keywords: choice reversals, decision time, risk preferences, salience

JEL Classification: D81, D87