Framing Effects Memory and Illusions Information Processing Fuzzy-trace theory Discussion
In prospect theory, the S shape of the value function predicts framing effects: concave for gains, and convex for losses (see Figure 1, below). Outcomes are termed in gains and losses, where gains indicates risk aversion and convex for indicating risk seeking. Framing is a perceptual phenomenon similar to visual illusions, as mentioned in the Memory and Illusions section of this web site. With framing, outcomes are viewed from two (or more) perspectives, but the objective outcomes remain unchanged.
Figure 1. Prospect Theory S-Curve
Source (slight editing - color): http://www.lgu.ac.uk/psychology/hardman/YP301_6a/sld019.htm
Further distinctions to be made with respect to framing effects were initiated by Wang (1996). Wang found that framing effects appeared to take two distinct forms. From this conclusion, he introduced two types of framing effects, 1) bi-directional framing effects, and 2) unidirectional framing effects.
Bi-directional Effects. This form of the framing effect involves preference reversal from predominantly risk averse to predominantly risk seeking or vice versa, due to the dichotic effect of the framing of the choice outcomes. This bi-directional framing effect is characterized by predominant risk-averse choices under positive framing and predominant risk-seeking choices under negative framing (Wang, 1996). This is similar in context, to the standard framing identified through fuzzy-trace theory, which will be explained shortly (Reyna & Ellis, 1994). This could be prevalent in children or adults who are not very much interested, or do not have high levels of personal involvement in a decision. When these occur, individuals appear to be more vulnerable to framing effects.
Unidirectional effects also appear in decision making problems when groups rather than individuals have been asked to make a decision (Paese, Bieser, & Tubbs, 1993). When risk seeking individuals were asked to make a decision as a group, their tendency towards risk seeking increased. However, when risk-averse individuals were asked to make a group decision, their tendencies towards averting risk increased.
Overall, studies on framing effects indicated that they were robust (Kuhberger, 1998). However, results indicated that the overall framing effect between conditions is only moderate in size, and differences of these effects vary considerably across designs and situational tasks (Kuhberger, 1998; Levin et. al., 1988; Reyna & Brainerd, 1995). Several investigators have argued that the classical framing effects (bi-directional or standard) occur only when ambiguity about a choice problem is high. For example, the framing effects occur when people are ambiguous in their experiences of consequences of a decision or if the information provided is not complete (Billings & Scherer, 1988; Frisch, 1993; Levin et. al., 1985; Levin et. al., 1986; Levin et. al., 1988; and Wang, 1996). Levin et. al. found that subjects were significantly affected by the way in which survey information was framed in rating the incidence of cheating which is consistent with framing effect studies. However, the effect of the information frame depended on the nature of the tasks. In their study, Levin et. al. (1988) found that the disappearance of framing effects with increased levels of personal involvement was apparently due to a discounting of the information passage containing the framing manipulation. They concluded that when a decision is either personal or moral in nature, judges are apparently able to ignore irrelevant outside sources of information and rely on their personal values (Levin et. al., 1988). In these situations classical framing effects were diminished or eliminated.
also found similar results when he investigated framing effects. Based
on his findings he suggested that the framing effects may have resulted
from the lack of clarity in choice preferences. A decision maker
with an ambiguous or ambivalent risk preference may actively search for
more information besides the tasks, content, and context variables embedded
in decision problems. In this condition, the decision maker’s risk
preference may rely on not only the choice options themselves but also
the way in which these choice options are worded, phrased, or framed.
Gingrich and Soli (1984) found that the whole process of making a decision
in framing problems entailed successively evaluating several alternatives
and the results of each evaluation must be remembered and compared.
They believed this procedure placed heavy demands on working memory, and
errors, as measured from the linear programming optimal, resulted.
When information presented to the respondent is inadequate, then even higher
levels of demands are placed on the working memory and errors are at high
risk to occur.