Need, frames, and time constraints in risky decision-making

• Published in: Theory and decision Vol. 89; no. 1; pp. 1 - 37
• Main Authors: Diederich, Adele, Wyszynski, Marc, Traub, Stefan
• Format: Journal Article
• Language: English
• Published: New York, NY Springer US 01.07.2020; Springer Nature B.V
• Subjects: Behavioral/Experimental Economics; Cluster analysis; Decision making; Disease; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Expected utility; Experiments; Finance; Frame analysis; Framing effect; Game Theory; Individual differences; Induced need; Insurance; Management; Need; Operations Research/Decision Theory; Preferences; Reflection effect; Revealed preferences; Risky choice; Social and Behav. Sciences; Statistics for Business; Time constraints; Time limits; Utility functions; Decision-making; Need; Induced need; Reflection effect; Individual differences; Risky choice; Framing effect; Time constraints
• ISSN: 1573-7187; 0040-5833; 1573-7187
• DOI: 10.1007/s11238-020-09744-6

In two experiments, participants had to choose between a sure and a risky option. The sure option was presented either in a gain or a loss frame. Need was defined as a minimum score the participants had to reach. Moreover, choices were made under two different time constraints and with three different levels of induced need to be reached within a fixed number of trials. The two experiments differed with respect to the specific amounts to win and the need levels. The 2 × 2 × 3 design was a within-subject design. Data were evaluated on an overall and on a group level, the latter based on participants’ stated risk preference and on revealed preferences (choice proportions) using cluster analysis across subjects. Overall, the results showed riskier behavior when the choice options were presented as losses as compared to gains (framing effect) and when the induced need was highest. Time limits enhanced the framing effect.