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Dissecting the risky-choice framing effect: Numeracy as an individual-difference factor in weighting risky and riskless options

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Author Info
Ellen Peters
Irwin P. Levin
Abstract

Using five variants of the Asian Disease Problem, we dissected the risky-choice framing effect by requiring each participant to provide preference ratings for the full decision problem and also to provide attractiveness ratings for each of the component parts, i.e., the sure-thing option and the risky option. Consistent with previous research, more risky choices were made by respondents receiving negatively framed versions of the decision problems than by those receiving positively framed versions. However, different processes were evident for those scoring high and low on numeracy. Whereas the choices of the less numerate showed a large effect of frame above and beyond any influence of their evaluations of the separate options, the choices of the highly numerate were almost completely accounted for by their attractiveness ratings of the separate options. These results are consistent with an increased tendency of the highly numerate to integrate complex numeric information in the construction of their preferences and a tendency for the less numerate to respond more superficially to non-numeric sources of information.

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Publisher Info
Article provided by Society for Judgment and Decision Making in its journal Judgment and Decision Making.

Volume (Year): 3 (2008)
Issue (Month): 6 (August)
Pages: 435-448
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Handle: RePEc:jdm:journl:v:3:y:2008:i:6:p:435-448

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Related research
Keywords: numeracy; framing; individual differences; risky choices; attribute framing.;

References listed on IDEAS
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  1. Wang, X. T., 1996. "Framing Effects: Dynamics and Task Domains," Organizational Behavior and Human Decision Processes, Elsevier, vol. 68(2), pages 145-157, November. [Downloadable!] (restricted)
  2. Huber, Joel & Payne, John W & Puto, Christopher, 1982. " Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 9(1), pages 90-98, June.
  3. Levin, Irwin P. & Schneider, Sandra L. & Gaeth, Gary J., 1998. "All Frames Are Not Created Equal: A Typology and Critical Analysis of Framing Effects," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 149-188, November. [Downloadable!] (restricted)
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