  Aggregating risks from multiple sources can be complex and demanding, and
decision makers usually adopt heuristics to simplify the evaluation process.
This paper axiomatizes two closed related and yet different heuristics, narrow
bracketing and correlation neglect, by relaxing the independence axiom in the
expected utility theory. The flexibility of our framework allows for
applications in various economic problems. First, our model can explain the
experimental evidence of narrow bracketing over monetary gambles. Second, when
one source represents background risk, we can accommodate Rabin (2000)'s
critique and explain risk aversion over small gambles. Finally, when different
sources represent consumptions in different periods, we unify three seemingly
distinct models of time preferences and propose a novel model that
simultaneously satisfies indifference to temporal resolution of uncertainty,
separation of time and risk preferences, and recursivity in the domain of
lotteries. As a direct application to macroeconomics and finance, we provide an
alternative to Epstein and Zin (1989) which avoids the unreasonably high timing
premium discussed in Epstein, Farhi, and Strzalecki (2014).
