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Framing and repetition effects on risky choices: A behavioral approach

Author

Listed:
  • Noemí Herranz-Zarzoso

    (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain)

  • Gerardo Sabater-Grande

    (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain)

Abstract

In this study we analyze framing effects caused by two versions of the choice (multiple price) list procedure used to elicitate individual risk preferences. In the probability equivalence (PE) version, subjects face pairwise choices between lotteries within a choice list. In the certainty equivalence (CE) version, subjects are asked to state a minimum selling price to give up the lottery they cope to. We implement a within-subjects experiment allowing for preference imprecision and preference for compound lotteries, by means of repetition of identical risk tasks. Introducing different variations in the number of lottery options offered with and without decreasing their range, we find that changes in the framework disturb subject’s risk preferences only in the CE version.

Suggested Citation

  • Noemí Herranz-Zarzoso & Gerardo Sabater-Grande, 2018. "Framing and repetition effects on risky choices: A behavioral approach," Working Papers 2018/04, Economics Department, Universitat Jaume I, Castellón (Spain).
    • Handle: RePEc:jau:wpaper:2018/04
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    References listed on IDEAS

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    More about this item

    Keywords

    risk aversion; framing effects; risk task repetition; preference imprecision; preference for compound lotteries; choice list procedure;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • 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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