Looking Closer at the Effects of Framing on Risky Choice: An Item Response Theory Analysis

Item response theory (IRT) methodology allowed an in-depth examination of several issues that would be difficult to explore using traditional methodology. IRT models were estimated for 4 risky-choice items, answered by students under either a gain or loss frame. Results supported the typical framing finding of risk-aversion for gains and risk-seeking for losses but also suggested that a latent construct we label preference for risk was influential in predicting risky choice. Also, the Asian Disease item, most often used in framing research, was found to have anomalous statistical properties when compared to other framing items.