A Test of Narrow Framing and its Origin

Luigi Guiso

No 818, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: I provide a test of narrow framing to explain why individuals turn down small positive expected value lotteries. Participants in a large survey have been asked whether they would accept a small lottery of winning 180 euros with probability of 1/2 or losing 100 euros with the same probability. To half of the sample, randomly selected, the lottery question was asked at the beginning of the interview; the other half made the decision immediately after they were asked to think about and report their subjec- tive probability distribution of future earnings. Consistent with narrow framing, I find that individuals that were induced to bring their earnings risk to mind before facing the decision are significantly less likely to turn it down. Furthemore, only those who actually say they are uncertain about their incomes are less likely to reject the lottery. I show that attitudes towards regret and reliance on intuition rather than reasoning are likely to drive the tendency to frame choices narrowly.

Pages: 43 pages
Date: 2008, Revised 2008-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.eief.it/files/2012/09/wp-18-a-test-of-n ... g-and-its-origin.pdf (application/pdf)

Related works:
Journal Article: A Test of Narrow Framing and its Origin (2015)
Working Paper: A test of narrow framing and its origin (2009)
Working Paper: A Test of Narrow Framing and its Origin (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:0818

Access Statistics for this paper

More papers in EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF) Contact information at EDIRC.
Bibliographic data for series maintained by Facundo Piguillem ().