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Framing and repetition effects on risky choices: A behavioural approach

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  • Herranz-Zarzoso, Noemí
  • Sabater-Grande, Gerardo
  • Jaramillo-Gutiérrez, Ainhoa

Abstract

Framing effects play an important role in individual decision-making under risk. This investigation revisits framing effects caused by two versions of the choice list procedure, lottery vs. lottery (LL) and lottery vs. certainty (LC). In the first, subjects face pairwise choices between lotteries within a choice list. In the second, subjects face pairwise choices between a safe amount and a lottery. In order to measure the sensitivity of subjects’ choices to the structure of the tasks, we implement an incentive-compatible experiment using repetition in order to have a robust measure of the subjects’ propensity to make a choice. Particularly, it is tested whether variations in the number of options offered in a choice list with and without variations in the range of options affect subjects’ choices. Our results suggest that changes in framework disturb subjects’ risk preferences only in the LC version when the range of options presented has been varied.

Suggested Citation

  • Herranz-Zarzoso, Noemí & Sabater-Grande, Gerardo & Jaramillo-Gutiérrez, Ainhoa, 2020. "Framing and repetition effects on risky choices: A behavioural approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 84(C).
    • Handle: RePEc:eee:soceco:v:84:y:2020:i:c:s221480431830507x
    DOI: 10.1016/j.socec.2019.101504
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    More about this item

    Keywords

    Risk aversion; Framing effects; Risk task repetition; Choice list procedure;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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