Framing Effects in Choices With Somewhat Risky Options

When a certain option and a risky option are both described as potential gains, most people choose the certain option. However, when the same two options are described as potential losses, most people choose the risky option. This famous preference pattern is known as the risky-choice framing effect. Despite the seeming rarity of sure things and all-or-none risks in real life, surprisingly little research on this framing effect has involved options with intermediate levels of risk. In this research, we identified four types of “somewhat risky” options, combined them with each other and with certain and all-or-none options to create 15 risk comparisons in both gains and losses in each of four domains (cancer, drought, investment, and wildfire), and conducted two preregistered experiments in which we varied risk comparisons between or within participants in both student and online samples (total N = 2,586 after exclusions). We found significant framing effects in almost all risk comparisons, greatly expanding the range of decisions in which framing is relevant. In addition, we used out-of-sample predictions from 13 versions of risky-choice theories to evaluate how well those theories accounted for participants’ choices. Versions of transfer-of-attention-exchange theory (TAX) generally outperformed versions of prospect theory, fuzzy-trace theory, the priority heuristic, and other accounts, although prospect theory without loss aversion outperformed TAX and the other accounts when we used an alternate set of parameter values.