This article reexamines the assumptions underlying the disease problem used by Tversky and Kahneman (1981) to illustrate gain– loss formulation effects. It is argued that their reported effect may have been due to asymmetries in the ambiguity of the sure and risky prospects and to the entanglement of two distinct types of formulation manipulations: one having to do with the expected outcomes that are made explicit (positive vs negative) and the other having to do with the descriptors used to convey the relevant expected outcomes (lives saved/not saved vs lives lost/not lost). Two experiments using a formally equivalent problem in which these confounds were eliminated revealed no significant predictive effect of either descriptor or outcomes frames on choice, although a marginally significant framing effect was obtained in Experiment 1 when the signs of the two framing manipulations were congruent. Implications for prospect theory are discussed. � 2001 Academic Press Key Words: framing effects; formulation effects; choice; gains and losses. Pessimists see the wine glass half empty, optimists see it half full. As this adage of lay personology suggests, the same event may be viewed in different ways by different people. Moreover, sometimes each of these alternative perspectives are objectively correct. A wine glass half empty is a wine glass half

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Individual differences in reasoning:

of normative complexity, This research aims instead to test the.'rational choice ' models (Shafir & models, as well as their undeniable prominence in the social80 I FRAMING EFFECTS AND RATIONALITY seems, at first blush, a strange brew of the remarkably crude and the exquisitely subtle. For example, in studies of (explicit) visual recognition, people can be oblivious to changes even in gross details of the visual scene (Rensink et al., 1997); while in studies of (implicit) visual priming, people can be higWy sensitive to subtle unattended features of the visual stimulus, sometimes for weeks after a single viewing (Treisman & DeSchepper, 1996). For this reason, the ramifications of subtle information seeping unintended through an experimental design are usually difficult to prejudge. In empirical tests of all kinds-whether of rational actor models or explicitly cognitive models-the researcher must take pains to ensure that all of the information available to the subject has been accounted for. The second class of problems is more specific to the empirical study of normative models. This research requires, not just accounting for all the information that is

Framing experiments seek to rigorously separate out the effects of relevant and irrelevant information on human judgment and choice processes. Because they appear to elegantly streamline the normative analysis of human cognition, these experiments have assumed a central place in the so-called “Rationality Debate ” – the controversy, within and between the various

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shirt, and a Washington Nationals baseball cap began to play his violin at the L’Enfant Plaza metro station in Washington D.C. Over the next 43 minutes that he played, 1,097 people passed him by. Among them, only seven stopped to listen for at least a minute. Twenty-seven gave him money, most without breaking their pace, for a grand total of $32 and change. Only one person, who gave the man $20—more than half of what he earned—realized that the “fiddler ” was Joshua Bell, one of the world’s most celebrated musicians, who had just played six timeless pieces of music on a violin handcrafted by Stradivari in 1713 and worth an estimated 3.5 million dollars. Two days earlier, Bell had performed at a theater in Boston where merely pretty good seats sold for $100. This study organized by The Washington Post (Weingarten, April 8, 2007) poignantly illustrates the importance of context on subjective valuation. As Weingarten put it, “He [Bell] was, in short, art without a frame. ” The Bell demonstration, of course, was not designed to carefully disentangle the possible causal determinants of people’s ostensible indifference toward beauty in a mundane environment, but rather to conjure in our minds the idea that, in two disparate contexts, the same man playing the same music on the same exquisite

Correspondence concerning this article should be addressed to X.T. Wang, Psychology Department,

A meta-analysis of Asian disease-like studies is presented to identify the factors which determine risk preference. First the confoundings between probability levels, payoffs, and framing conditions are clarified in a task analysis. Then the role of framing, reflection, probability, type, and size of payoff, is evaluated in a meta-analysis. It is shown that bidirectional framing effects exist for gains and for losses. Presenting outcomes as gains tends to induce risk aversion while presenting outcomes as losses tends to induce risk seeking. Risk preference is also shown to depend on the size of the payoffs, on the probability levels, and on the type of good at stake (money/property vs. human lives). In general, higher payoffs lead to increasing risk aversion. Higher probabilities lead to increasing risk aversion for gains and to increasing risk seeking for losses. These findings are confirmed by a subsequent empirical test. Shortcomings of existing formal theories, such as Prospect theory, Cumulative prospect theory, Venture theory, and Markowitz's utility theory are identified. It is shown that it is not probabilities or payoffs, but the framing condition which explains most variance. These findings are interpreted as showing that no linear combination of formally relevant predictors is sufficient to capture the essence of the framing phenomenon.