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Keywords:

  • risk preferences;
  • decision;
  • context;
  • group;
  • size;
  • framing;
  • effects;
  • bias

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.