Probability weighting bias in risky decision making: Psychological mechanism and optimizing strategies

Sun, Qingping; Wu, Qingyuan; Zhang, Jing; Jiang, Chengming; Zhao, Lei; Hu, Fengxia

doi:10.3724/sp.j.1042.2019.00905

Cited by 1 publication

(1 citation statement)

References 40 publications

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“…For the study design, all six studies in our research used the case of 50% risk probability, which is moderate. However, other studies have demonstrated that probability affects individuals' risk preferences (e.g., Sun et al, 2019;Sun, Zhang, Zhang, & Zhang, 2018;Tversky & Kahneman, 1992). According to cumulative prospect theory, people's risk attitudes showed a distinctive fourfold pattern: risk aversion for gains and risk seeking for losses of moderate and high probability, and risk seeking for gains and risk aversion for losses of low probability (Tversky & Kahneman, 1992).…”

Section: Limitations and Future Directionsmentioning

confidence: 99%

Risk preferences in self–other decisions: The effect of payoff allocation framing

Yang

Liu

et al. 2020

Behavioral Decision Making

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The effect of framing is well established: Decision makers' preferences are influenced by how outcomes or attributes are phrased. In the financial domain, individuals often make decisions for themselves and for others. Therefore, decisions in a two‐person context with the outcome equally allocated can be framed in two ways defined as the allocation framing: (1) self‐allocation frame: making a decision for oneself, with half the payoffs shared by another person; and (2) other‐allocation frame: making a decision for the other person and sharing half the payoffs. The results of six studies provided consistent evidence that people are more risk seeking in the self‐allocation frame than in the other‐allocation frame, and the effect was only noteworthy in the gain domain—not the loss domain. Our findings on allocation framing provide a meaningful contribution to studies of self–other decision making.

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