Risky choice framing: Task versions and a comparison of prospect theory and fuzzy‐trace theory

TLDR

Framing effects demonstrate that linguistically different descriptions of equivalent options can produce inconsistent choices, and literature shows that adding or subtracting complements of the sure option can yield classic, reversed, or no framing effects. The study aims to test prospect theory and fuzzy‑trace theory against each other regarding framing effects. An online experiment examined how subtracting complements of the risky option influences choices. Results show that the assumption of equivalence of formulations is invalid, favor fuzzy‑trace theory over prospect theory, and suggest implications for formal models and rationality. © 2009 John Wiley & Sons, Ltd.

Abstract

Abstract Framing effects are said to indicate irrationality in decision making because they illustrate that linguistically different descriptions of equivalent options lead to inconsistent choices. A review of the literature on the effects of adding, or subtracting, implicated complements of the sure option shows that this leads to a classic framing effect, a reversal of the classic effect, or no framing effect. Thus, the assumption of equivalence of formulations is not justified. In addition we provide a test of two major, but opposing theories on framing, prospect theory and fuzzy‐trace theory. Based on an online study we investigated the effects of subtracting complements of the risky option. The results are more consistent with fuzzy‐trace theory than with prospect theory. The consequences of these findings for the application of formal models like prospect theory, and for rationality, are discussed. Copyright © 2009 John Wiley & Sons, Ltd.