Perceived social context and risk preference: A re‐examination of framing effects in a life‐death decision problem

Abstract

Abstract This study examines the effects of perceived group context on subjects risk attitudes and their sensitivity to the framing of choice outcomes in a ‘life‐death’ decision problem. It seeks to uncover the psychological mechanisms underlying decision‐making biases by systematically manipulating the decision context in which the ‘life‐death’ problem was described. The study revealed that subjects risk preferences varied as a function of the experimental manipulations. Previously observed reversals in preferences (framing effects) appeared in large‐group contexts and disappeared in small‐group and family contexts. When considering the fate of small groups, subjects unambiguously favored the probabilistic outcome, no matter how the ‘life‐death’ decision problem was framed. The empirical data obtained from the present study suggest that human choice patterns are behaviorally distinguishable across large‐group, small‐group, and family social contexts.