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Words or Numbers? How Framing Uncertainties Affects Risk Assessment and Decision-Making

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  • Robin Bodenberger
  • Kirsten Thommes

Abstract

The communication of uncertainties needs to be as precise as possible to enable the receiver of risk-messages to adapt their behavior appropriately. However, the communication of uncertainties comes with its own set of challenges as most senders prefer to communicate uncertainty through verbal probability phrases (e.g., likely) - a communication form characterized by its ambiguity and (framed) directionality. While it is well known that receivers often do not translate such phrases into the numerical probability intended by the sender, it is less clear how this discrepancy influences subsequent behavioral actions. By implementing a laboratory experiment, we show that individuals value uncertain options with medium to high likelihoods significantly lower when uncertainty is communicated verbally rather than numerically. This effect may lead to less rational decisions under verbal communication, particularly at high likelihoods. Those results remain consistent even if individuals translate verbal uncertainty correctly into the associate numerical uncertainty, implying that a biased behavioral response is not only induced by mistranslations. Instead, ambiguity about the exact meaning of a verbal phrase interferes with decision-making even beyond mere mistranslations. These findings tie in with previous research on ambiguity aversion, which has predominantly operationalized ambiguity through numerical ranges rather than verbal phrases. We conclude that managers and firms should carefully consider the impact of uncertainty framing on employees' decision-making and customer purchasing behavior, opting for numerical probabilities when possible.

Suggested Citation

  • Robin Bodenberger & Kirsten Thommes, 2025. "Words or Numbers? How Framing Uncertainties Affects Risk Assessment and Decision-Making," Papers 2502.06241, arXiv.org, revised Feb 2025.
  • Handle: RePEc:arx:papers:2502.06241
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    References listed on IDEAS

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    1. Kocher, Martin G. & Lahno, Amrei Marie & Trautmann, Stefan T., 2018. "Ambiguity aversion is not universal," European Economic Review, Elsevier, vol. 101(C), pages 268-283.
    2. Lilleholt, Lau, 2019. "Cognitive ability and risk aversion: A systematic review and meta analysis," Judgment and Decision Making, Cambridge University Press, vol. 14(3), pages 234-279, May.
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    4. Cokely, Edward T. & Galesic, Mirta & Schulz, Eric & Ghazal, Saima & Garcia-Retamero, Rocio, 2012. "Measuring Risk Literacy: The Berlin Numeracy Test," Judgment and Decision Making, Cambridge University Press, vol. 7(1), pages 25-47, January.
    5. Collins, Robert N. & Mandel, David R., 2019. "Cultivating credibility with probability words and numbers," Judgment and Decision Making, Cambridge University Press, vol. 14(6), pages 683-695, November.
    6. Lau Lilleholt, 2019. "Cognitive ability and risk aversion: A systematic review and meta analysis," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(3), pages 234-279, May.
    7. repec:cup:judgdm:v:14:y:2019:i:6:p:683-695 is not listed on IDEAS
    8. Robert N. Collins & David R. Mandel, 2019. "Cultivating credibility with probability words and numbers," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(6), pages 683-695, November.
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