Ambiguity seeking in multi-attribute decisions: Effects of optimism and message framing

This paper investigates the influence of message framing and personality variables on preferences over ambiguity in the context of multi-attribute decision scenarios. Undergraduate subjects responded to scenarios in which one of two medical treatments was associated with ambiguous probabilities of treatment effects. Probabilities were either positively or negatively framed. Subjects indicated their degree of preference for one treatment over the other. Subjects' optimism, trait anxiety, health locus of control, need for cognitive structure, and current mood were measured. In two separate studies, subjects preferred ambiguity when probabilities were positively framed, and were neutral toward ambiguity when probabilities were negatively framed. Also, in both studies the preference for ambiguity in positively framed scenarios was greater for more optimistic subjects. The unexpected finding of ambiguity seeking may be associated with the use of different decision strategies in multi-attribute versus single-attribute decisions.     

Framing decisions: Hypothetical and real

This paper addresses the general issue of whether the practice of investigating human decision making in hypothetical choice situations is at all warranted, or under what conditions. A particularly relevant factor that affects the match between real decisions and hypothetical decisions is the importance of a decision’s consequences. In the literature experimental gambles tend to confound the reality of the decision situation with the size of the payoffs: hypothetical decisions tend to offer large payoffs, and real decisions tend to offer only small payoffs. Using the well-known framing effect (a tendency of risk-aversion for gains and of risk-seeking for losses) we find that the framing effect depends on payoff size but hypothetical choices match real choices for small as well as large payoffs. These results appear paradoxical unless size of incentive is clearly distinguished from the reality status of decision (real versus hypothetical). Since the field lacks a general theory of when hypothetical decisions match real decisions, the discussion presents an outline for developing such a theory.     

Corporate foreign exchange risk management: A study in decision making under uncertainty

This paper examines the management of foreign exchange risk in multinational corporations in light of the conclusions of previous empirical and theoretical investigations into decision making under uncertainty. Cognitive perceptions of risk and uncertainty are shown to underlie the hedging decisions made by corporate treasury managers, which are often demonstrably sub-optimal in a Bayesian expected utility framework. The findings suggest that simple principal-agent approaches to explaining seemingly sub-optimal corporate risk management preferences are inadequate inasmuch as they fail to account for the markedly different perspectives on risk and uncertainty taken by financial economists (qua economists) and corporate financial risk managers.     

Is luck on my side? Optimism,pessimism, and ambiguity aversion

The influences of optimism and pessimism on ambiguity aversion were investigated in two tasks that manipulated the presence or absence of a potentially competitive experimenter. A total of 112 participants chose which option—ambiguous or known-risk—they preferred in the two slightly differing Ellsberg urns tasks. Optimism was measured using the Extended Life Orientation Test (ELOT). Highly optimistic people showed significantly less ambiguity aversion than less optimistic people when information was given that the number of balls was randomly determined. This pattern was present but less pronounced in the condition when the composition of the ambiguous urn could be interpreted as being influenced (rigged) by the experimenter. Pessimism was uninfluential. Perceptions of the situation, especially the degree of trust in the experimenter, were significantly influenced by the participants' optimism. People who do not have highly optimistic personalities tend to shy away from choosing ambiguous options. When ambiguity is clear, and trust issues are removed, people's optimistic outlook influences their degree of ambiguity aversion and thus their decisions.     

From individual preference construction to group decisions: Framing effects and group processes

Two choice tasks known to produce framing effects in individual decisions were used to test group sensitivity to framing, relative to that of individuals, and to examine the effect of prior, individual consideration of a decision on group choice. Written post-decision reasons and pre-decision group discussions were analyzed to investigate process explanations of choices made by preexisting, naturalistic groups. For a risky choice problem, a similar framing effect was observed for groups and individuals. For an intertemporal choice task where consumption was either delayed or accelerated, naïve groups (whose members had not preconsidered the decision) showed a framing effect, less discounting in the delay frame, opposite to that observed in individuals. Predecided groups showed a non-significant effect in the other, expected direction. In all cases, process measures better explained variability in choices across conditions than frame alone. Implications for group decision research and design considerations for committee decisions are addressed.     

Representation of subjective preferences under ambiguity

The objective of this paper is to show how potentially incomplete preferences of a decision maker (DM) on acts can be modelled formally in a subjective ambiguity perspective. We identify acts as functions from a state space Ω to bounded support (finitely additive) probabilities over a set X of prizes. Then, we characterize preferences over equibounded acts a which have a numerical representation by the family of functionals , where u is a cardinal utility on X (representing the risk attitude of the DM) and Π is a unique pointwise closed convex set of probabilities on all events in Ω (representing the ambiguity perceived by the DM). To this end, in addition to the usual independence and continuity assumptions, we add completeness and dominance for preferences restricted to constant acts; moreover, we consider two other properties (subjective monotonicity and coherence) related with the preferences of a DM who is not able, owing to his partial knowledge, to evaluate any event in Ω.     

Quantum mechanics and violations of the sure-thing principle: The use of probability interference and other concepts

The use of quantum mechanical concepts in social science is a fairly new phenomenon. This paper uses one of quantum mechanics’ most basic concepts, probability interference, to explain the violation of an important decision theory principle (the ‘sure-thing principle’). We also attempt to introduce other quantum mechanical concepts in relation to the sure-thing principle violation.     

Framing Persuasive Appeals: Episodic and Thematic Framing, Emotional Response, and Policy Opinion

Those seeking to frame political issues to their advantage recognize the power of emotional appeals. Yet the study of framing has focused mainly on the cognitive effects of framing rather than on its emotional effects. This study presents the results of two experiments designed to explore the effect of episodic and thematic framing on emotional response and policy opinion. Participants were randomly assigned to read a column arguing against mandatory minimum sentencing that employed either a thematic or one of two episodic frames featuring a woman who received a harsh sentence under the policy. Episodic framing was more emotionally engaging. Furthermore, the specific emotions elicited by the episodic frame—sympathy and pity for the woman featured in the column—were associated with increased opposition to mandatory minimum sentencing. Yet the thematic frame was actually more persuasive once this indirect effect of frame on emotional response was taken into account. The results are consistent with the conclusion that framing effects on policy opinion operate through both affective and cognitive channels. The theoretical and practical implications of the study are discussed.     

Framing, intentions, and trust–choice incompatibility

The present paper examines how framing of messages and the intentions inferred from different—positive vs. negative—framings, interact with the development of trust. Empirical evidence is presented showing that different, logically equivalent, frames are supposedly interpreted as implying different intentions. Next, the relationship between different frames (and the corresponding intentions reflected from these frames) and trust are explored. Finally, and most important, the relationship between the assessment of trust, inferred from different frames, and the corresponding choice behavior resulting from these frames, are investigated. Specifically, consider agents A and B offering to sell exactly the same commodity, except that one agent formulates it in a positive and the other in a negative frame. The different frames may lead to different assessments of the trustworthiness of the two agents. Following common wisdom, if agent A is trusted more than B, then one should prefer to conduct transactions with the former rather than with the latter agent. Several experiments are presented that are incompatible with this conjecture. For example, when faced with a choice between two butchers, whose ground beef is advertised as containing 25% fat (negative frame) or 75% lean (positive frame), respectively, most people have more trust in the former yet most indicate they would buy their meat from the latter butcher. This phenomenon, in which negative framing weighs more in trust assessments, and positive framing weighs more in choice, is labeled trust–choice incompatibility. The robustness of the phenomenon is further demonstrated in several experiments, and possible explanations for its occurrence are discussed.     

Exploring the Valence‐Framing Effect: Negative Framing Enhances Attitude Strength

In his now‐classic research on inoculation theory, McGuire (1964 ) demonstrated that exposing people to an initial weak counterattitudinal message could lead to enhanced resistance to a subsequent stronger counterattitudinal message. More recently, research on the valence‐framing effect ( Bizer & Petty, 2005 ) demonstrated an alternative way to make attitudes more resistant. Simply framing a person's attitude negatively (i.e., in terms of a rejected position such as anti‐Democrat) led to more resistance to an attack on that attitude than did framing the same attitude positively (i.e., in terms of a preferred position such as pro‐Republican). Using an election context, the current research tested whether valence framing influences attitude resistance specifically or attitude strength more generally, providing insight into the effect's mechanism and generalizability. In two experiments, attitude valence was manipulated by framing a position either negatively or positively. Experiment 1 showed that negatively framed attitudes were held with more certainty than were positively framed attitudes. In Experiment 2, conducted among a representative sample of residents of two U.S. states during political campaigns, negatively framed attitudes demonstrated higher levels of attitude certainty and attitude‐consistent behavioral intentions than did attitudes that were framed positively. Furthermore, the effect of valence framing on behavioral intentions was mediated by attitude certainty. Valence framing thus appears to be a relatively low‐effort way to impact multiple features associated with strong attitudes.     

Common and distinct factors in decision making under ambiguity and risk: A psychometric study of individual differences

The relation between decision making under ambiguity and risky decision making was examined. In Studies 1 and 2, choices under ambiguity were measured for a large sample receiving an Ellsberg-type Ambiguity-Probability Tradeoff Task. Participants with extreme scores were recruited for Part 2 of each study which consisted of a risky decision making task (Study 1) or a series of decisions under ambiguity in “real life” scenarios (Study 2). Despite a time gap of up to 2 months, individual differences in scores on Part 1 predicted scores on Part 2. In Study 3 participants received in a single session several risky decision making tasks, several measures of decision making under ambiguity, and several personality scales related to uncertainty and decision making style. Taken together, the findings support the existence of a stable dispositional trait to reduce uncertainty in decision making but also task-specific differences related to gains and losses.     

Framing effects: An analytic-holistic perspective

Under what conditions, why, and for whom are framing effects most likely? In this paper, we build on the existing literature (e.g., Chaiken, 1987; Epstein, Lipson, Holstein, & Huh, 1992; Evans & Over, 1996; Fiske & Neuberg, 1990; Payne, Bettman, & Johnson, 1988; Simon, 1956; Sloman, 1996; Stanovich & West, 2000), in providing answers to these questions. We hypothesized that individuals who engage a decision task with an analytic/systematic versus holistic/heuristic processing style are especially insensitive to the influence of framing effects. Therefore, we predicted that the way in which a decision is framed should have a relatively weak influence on those who were either induced (Experiment 1) or predisposed (Experiment 2) to adopt a predominantly analytic/systematic versus holistic/heuristic processing style. The results of both experiments supported this position.     

Distinguishing indeterminate belief from “risk-averse” preferences

I focus my discussion on the well-known Ellsberg paradox. I find good normative reasons for incorporating non-precise belief, as represented by sets of probabilities, in an Ellsberg decision model. This amounts to forgoing the completeness axiom of expected utility theory. Provided that probability sets are interpreted as genuinely indeterminate belief (as opposed to “imprecise” belief), such a model can moreover make the “Ellsberg choices” rationally permissible. Without some further element to the story, however, the model does not explain how an agent may come to have unique preferences for each of the Ellsberg options. Levi (1986, Hard choices: Decision making under unresolved conflict. Cambridge, New York: Cambridge University Press) holds that the extra element amounts to innocuous secondary “risk” or security considerations that are used to break ties when more than one option is rationally permissible. While I think a lexical choice rule of this kind is very plausible, I argue that it involves a greater break with xpected utility theory than mere violation of the ordering axiom.     

The Effect of Sport Commentator Framing on Viewer Attitudes

An experimental analysis was conducted to determine the effects of involvement, commentator framing, and gender on viewer attitudes toward female athletes. The sample was comprised of 112 students at a mid-western university in the United States. Hypotheses and research questions were tested through a 2 × 3 multivariate analysis of covariance (MANCOVA). Results indicated the overall MANCOVA was significant. Involvement was positively related to viewer attitudes’ towards the dependent variables and explained 27.8% of the variance. Gender explained 39.3% of the variance in attitudes as male viewers had significantly lower mean scores on all dependent variables. Male viewers had significantly lower scores than female viewers in the positive framing condition; the interaction explained 8% of the variance in viewers’ perceptions of respectability of female athletes.     

行为决策中模糊规避研究的回顾与展望

模糊规避是指在相同奖赏的情况下,决策者会偏好有精确概率的事件而不是从主观上判断具有相同模糊概率的事件。自从Ellsberg提出模糊规避的概念以来,模糊规避已在行为决策研究的多个领域得到广泛验证。本文梳理了近五十年来关于模糊规避的研究文献,系统分析了模糊规避的研究范式、心理机制和影响因素,同时提出了未来的研究展望。     

Pricing risk and ambiguity: The effect of perspective taking

In the valuation of uncertain prospects, a difference is often observed between selling and buying perspectives. This paper distinguishes between risk (known probabilities) and ambiguity (unknown probabilities) in decisions under uncertainty and shows that the valuation disparity increases under ambiguity compared to risk. It is found that both the comparative versus noncomparative evaluation of risky and ambiguous prospects and the uniqueness of the valuation perspective (either seller or buyer) moderate this increase in the disparity under ambiguity. The finding is consistent with recent theoretical accounts of pricing under uncertainty. We discuss implications for market behaviour and for the ambiguity paradigm as a research tool.     

Framing social information and generalized social phobia

Patients with generalized social phobia (GSP, N=33) and matched community controls (N=31) engaged in a social interaction that was constructed to go well, and then received feedback that framed social cues reflecting either the absence of negative outcomes or the presence of positive outcomes. Following feedback that framed positive social cues, the GSP group predicted they would experience more anxiety in a subsequent interaction than did non-phobic controls. In contrast, following feedback framing the absence of negative outcomes, the GSP group did not differ from controls in their anxiety predictions. The results demonstrated that framing paradigms and methods can be usefully applied to the study of cognitive processes in social phobia and indicated that research to examine how GSP patients process specific types of social information is needed.     

Finding meaning in art: Preferred levels of ambiguity in art appreciation

Uncertainty is typically not desirable in everyday experiences, but uncertainty in the form of ambiguity may be a defining feature of aesthetic experiences of modern art. In this study, we examined different hypotheses concerning the quantity and quality of information appreciated in art. Artworks were shown together with auditorily presented statements. We tested whether the amount of information, the amount of matching information, or the proportion of matching to nonmatching statements apparent in a picture (levels of ambiguity) affect liking and interestingness. Only the levels of ambiguity predicted differences in the two dependent variables. These findings reveal that ambiguity is an important determinant of aesthetic appreciation and that a certain level of ambiguity is appreciable.     

The role of ambiguity tolerance in career decision making

The role of ambiguity tolerance in career decision making was examined in a sample of college students (n = 275). Three hypotheses were proposed regarding the direct prediction of ambiguity tolerance on career indecision, the indirect prediction of ambiguity tolerance on career indecision through environmental and self explorations, and the moderation effect of ambiguity tolerance on the link of environmental and self explorations with career indecision. Results supported the significance of ambiguity tolerance with respect to career indecision, finding that it directly predicted general indecisiveness, dysfunctional beliefs, lack of information, and inconsistent information, and moderated the prediction of environmental exploration on inconsistent information. The implications of this study are discussed and suggestions for future research are provided.     

Framing effects under cognitive load: The role of working memory in risky decisions

Framing effects occur in a wide range of laboratory and natural decision contexts, but the underlying processes that produce framing effects are not well understood. We explored the role of working memory (WM) in framing by manipulating WM loads during risky decisions. After starting with a hypothetical stake of money, participants were then presented a lesser amount that they could keep for certain (positive frame) or lose for certain (negative frame). They made a choice between the sure amount and a gamble in which they could either keep or lose all of the original stake. On half of the trials, the choice was made while maintaining a concurrent WM load of random letters. In both load and no-load conditions, we replicated the typical finding of risk aversion with positive frames and risk seeking with negative frames. In addition, people made fewer decisions to accept the gamble under conditions of higher cognitive load. The data are congruent with a dual-process reasoning framework in which people employ a heuristic to make satisfactory decisions with minimal effort.