The framing effect and risky decisions: Examining cognitive functions with fMRI

By Cleotilde Gonzalez, Jason Dana, H. Koshino, Marcel Adam Just. 2005

252 citations recorded by the source corpus.

The ‘‘framing effect’’ is observed when the description of options in terms of gains (positive frame) rather than losses (negative frame) elicits systematically different choices. Few theories explain the framing effect by using cognitive information-processing principles. In this paper we present an explanatory theory based on the cost–benefit tradeoffs described in contingent behavior. This theory proposes that individuals examining various alternatives try to determine how to make a good decision while expending minimal cognitive effort. For this study, we used brain activation functional magnetic resonance imaging (fMRI) to evaluate individuals that we asked to choose between one certain alternative and one risky alternative in response to problems framed as gains or losses. Our results indicate that the cognitive effort required to select a sure gain was considerably lower than the cognitive effort required to choose a risky gain. Conversely,the cognitive effort expended in choosing a sure loss was equal to the cognitive effort expended in choosing a risky loss. fMRI revealed that the cognitive functions used by the decision makers in this study were localized in the prefrontal and parietal cortices of the brain,a finding that suggests the involvement of working memory and imagery in the selection process.

Subfields: Cognitive Neuroscience, Economics and Econometrics, General Decision Sciences

View Paper: https://www.semanticscholar.org/paper/a287a30743060e5a7abb99f3b7e0a824f1e111b1

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Citations in the corpus

Handbook of Consumer Finance Research (2008, background): “Brain activation in the prefrontal and parietal cortices during these decisions about uncertainty suggests that working memory and imagery are involved in the process (Gonzalez et al., 2005 ).”
What Does the Brain Tell Us About Trust and Distrust? Evidence from a Functional Neuroimaging Study (2010, unknown): “( 2005 ) and Gonzalez et al .”
Decision-making Competence, Executive Functioning, and General Cognitive Abilities (2012, background): “Reyna & Brainerd, 1991), at least in the domain of gains (Gonzalez et al., 2005).”
Anatomy of a decision: striato-orbitofrontal interactions in reinforcement learning, decision making, and reversal. (2006, background): “Finally, we explored whether our model could account for more nuanced effects showing that people are relatively more risk averse for gains than they are risk seeking for losses (e.g., Gonzalez et al., 2005; Tversky & Kahneman, 1986; Figure 10a).”