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A review of the certainty effect and influence of information processing

Author

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  • Ramirez, Patrick A.
  • Levine, Daniel S.

Abstract

This review considers two explanations for behavioral decision-making in reference to the certainty and framing effects. The findings from various paradigms such as a single questionnaire, gambles with repetition, and gambles guided by feedback are explained either by prospect theory or by expected utility theory. Finally this review attempts to account for the different findings and offers a possible explanation for the conflicting results by considering the role of experience which in turn can alter how information in processed as described by fuzzy trace theory which is a dual process theory of reasoning.

Suggested Citation

  • Ramirez, Patrick A. & Levine, Daniel S., 2013. "A review of the certainty effect and influence of information processing," Economics Discussion Papers 2013-47, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201347
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    References listed on IDEAS

    as
    1. Drazen Prelec & George Loewenstein, 1991. "Decision Making Over Time and Under Uncertainty: A Common Approach," Management Science, INFORMS, vol. 37(7), pages 770-786, July.
    2. Daniel K. N. Johnson & Tracy R. Gleason, 2009. "Who REALLY Wants to be a Millionaire? Gender Differences in Game Show Contestant Behavior Under Risk," Social Science Quarterly, Southwestern Social Science Association, vol. 90(2), pages 243-261.
    3. Hartog, Joop & Ferrer-i-Carbonell, Ada & Jonker, Nicole, 2002. "Linking Measured Risk Aversion to Individual Characteristics," Kyklos, Wiley Blackwell, vol. 55(1), pages 3-26.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    expected utility theory; prospect theory; fuzzy trace theory; certainty effect; framing effect;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • Y80 - Miscellaneous Categories - - Related Disciplines - - - Related Disciplines

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