Framing and the Role of the Second Actor: An Application of Prospect Theory to Bargaining

An actor's frame of reference significantly affects that actor's risk attitude. Although the frame of reference is often taken as a given, earlier work shows it to be the result of an actor's assumptions and beliefs, which can be manipulated by a second actor in a bargaining situation. As modeled here, confidence in selected assumptions can be manipulated by one of two means: changing the confidence of the actor about the future domain, and getting the actor to adopt a particular domain by discounting the utility of a course of action. Both methods force a change in the perceived domain and a shift in risk attitude. In addition to showing manipulation of an actor's frame, the model adds to our understanding of Kahneman and Tversky's original expression of prospect theory.     

Prospect Theory in Political Science: Gains and Losses From the First Decade

Prospect theory offers a number of advantages that justify its use in the analysis of political behavior, but it also has some aspects that limit its wider applicability in political contexts. This article reviews recent research highlighting these successes and limitations. Future research on the incorporation of prospect theory into models of political behavior should focus on such areas as group decision-making, reference point specification, and emotion.     

The Prospects for Prospect Theory: An Empirical Evaluation of International Relations Applications of Framing and Loss Aversion

International relations theorists have tried to adapt prospect theory to make it relevant to the study of real-world decision-making and testable beyond the constraints of the laboratory. Three experiments with undergraduate samples were conducted in an effort to clarify the advantages and limitations of prospect theory as adapted to explain political behavior. The first experiment tested hypotheses regarding the impact of prospect framing on group polarization, but these were only weakly supported. The second and third experiments examined alternative adaptations of the concept of framing; the results suggest that the political science expansion of the concept of framing may, under certain conditions, produce clear and robust preference reversals.     

Framing and Risky Choice as Influenced by Comparison of One's Achievements with Others: The Case of Investment in the Stock Exchange

Based on social comparison theory and equity theory, the first aim of this study was to examine the hypothesis that framing is affected not only by previous success or failure, but also by comparisons with relevant others' outcomes as well. The second aim of the study was to examine prospect theory propositions that people are risk aversive for gains and risk seeking for losses. A total of 220 students were administered scenarios that described outcomes of their stock investments (gains or losses). In addition, they were provided with information about their close friends' outcomes investing in similar stocks. Generally, the hypothesis regarding the influence of others' outcomes on framing was confirmed. However, results showed that, in contradiction to prospect theory, gain framing rather than loss framing was related to risk seeking behavior. Specifically, in the gain framing situation, the readiness to take risks was highest when the others' outcomes were equal to those of the participants. The limitations of prospect theory are discussed.     

Risk Orientation,Risk Exposure,and Policy Opinions: The Case of Free Trade

This research offers a general framework for thinking about how individual disposition towards risk influences public policy opinions. Affinity for or aversion to risk is, in part, a stable personality characteristic that interacts with risk and reward messages in complex policy debates. We examine the implications of this for public opinions about free trade with extensions to immigration policy. We argue and find that opinions about policy depend jointly upon one's exposure to potential gains or losses and one's risk orientation. The findings have implications for crafting and framing public policies because they highlight how individual characteristics are likely to shape the public response to policy proposals. Our findings suggest that there may be limits, in the aggregate, to the degree to which elites can alter the level of support for policies through framing or through offering risk‐mitigating policy provisions.