Multiple prospect framing and decision behavior: The mediational roles of perceived riskiness and perceived ambiguity

Srinivasan Venkatraman, John A. Aloysius, Fred D. Davis

Research output: Contribution to journalArticle

16 Scopus citations

Abstract

Decision makers facing a multiple prospect, which is a bundle of single prospects, are influenced by whether outcome information is framed narrowly (segregated) or broadly (aggregated). The present research hypothesizes perceived riskiness and perceived ambiguity as two distinct mediators of the effect of broad versus narrow prospect framing on decision behavior. Perceived riskiness and perceived ambiguity were conceptually defined as psychological constructs and new multi-item scales were developed and validated to operationalize them. Two experiments (a 100-shot gamble in Experiment 1, N = 118, and a 30-year retirement investment in Experiment 2, N = 84) were conducted. Both experiments supported all three hypotheses: riskiness and ambiguity perceptions were distinct constructs (Hypothesis 1), perceived riskiness mediated the effect of multiple prospect framing on decision behavior (Hypothesis 2), and perceived ambiguity mediated the effect of multiple prospect framing on decision behavior (Hypothesis 3). These findings advance our understanding of the psychological mechanisms underlying framing effects for multiple prospects and have substantial business and policy implications.

Original languageEnglish
Pages (from-to)59-73
Number of pages15
JournalOrganizational Behavior and Human Decision Processes
Volume101
Issue number1
DOIs
StatePublished - Sep 2006

Keywords

  • Judgment and decision making
  • Multiple prospect framing
  • Perceived ambiguity
  • Perceived riskiness
  • Preference reversal

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