Dissecting the risky-choice framing effect: Numeracy as an individual-difference factor in weighting risky and riskless options

By Ellen Peters, I. Levin. Judgment and Decision Making, 2008

175 citations recorded by the source corpus.

Using five variants of the Asian Disease Problem, we dissected the risky-choice framing effect by requiring each participant to provide preference ratings for the full decision problem and also to provide attractiveness ratings for each of the component parts, i.e., the sure-thing option and the risky option. Consistent with previous research, more risky choices were made by respondents receiving negatively framed versions of the decision problems than by those receiving positively framed versions. However, different processes were evident for those scoring high and low on numeracy. Whereas the choices of the less numerate showed a large effect of frame above and beyond any influence of their evaluations of the separate options, the choices of the highly numerate were almost completely accounted for by their attractiveness ratings of the separate options. These results are consistent with an increased tendency of the highly numerate to integrate complex numeric information in the construction of their preferences and a tendency for the less numerate to respond more superficially to non-numeric sources of information.

Subfields: Economics and Econometrics, General Decision Sciences, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/c571cd785341ce5b20fde55b3bd728c139420a4e

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Citations in the corpus

Measuring Risk Literacy: The Berlin Numeracy Test (2012, background): “…to be a predictor of decision strategies, affective reactions, comprehension and normative choices across many risky economic, health, and consumer decisions (Banks, O’Dea, & Oldﬁeld, 2010; Cokely & Kelley, 2009; Lipkus & Peters, 2009; Peters & Levin, 2008; Peters et al., 2006; Reyna et al., 2009).”
How numeracy influences risk comprehension and medical decision making. (2009, unknown): “According to Peters et al., the superior results of the more numerate are due to the greater clarity and precision of their perceptions of numbers (see also Peters & Levin, 2008).”
Cognitive abilities and superior decision making under risk: A protocol analysis and process model evaluation (2009, background): “…expected-value choices via expected-value calculations.2 Other research indicates that individual differences in risky decision making may also arise from variations in one’s general knowledge and understanding of probabilities — i.e., one’s numeracy (Peters & Levin, 2008; Peters et al., 2006).”
Predicting biases in very highly educated samples: Numeracy and metacognition (2014, background): “…with pure mathematical skill but instead refers to mathematical or quantitative literacy (Steen, 1990; see also Nelson, Reyna, Fagerlin, Lipkus, & Peters, 2008, and Reyna et al., 2009), reflecting an emphasis on “mathematics in context” as described in the US Common Core State Standards…”
Correlations of cognitive reflection with judgments and choices (2010, background): “…correlates with different types of general knowledge — e.g., numeracy (Cokely & Kelley, 2009; for the concept of numeracy see Lipkus et al., 2001; Peters & Levin, 2008) and academic achievement (Frederick, 2005) — it could be argued that the relation between CRT and decision making is…”