Effect of framing on risky choice: One case study in China

Abstract

The effect of framing on Chinese undergraduates was explored using Tversky and Kahneman's (1981) well-known Asian Disease Problem. Participants were divided into three groups with different formats: positive, negative, and balanced format, respectively. There was a significant difference between the Chinese sample and Tversky and Kahneman's American sample under positive format, but no difference under the negative format. Chinese students were more prone to risky options. Results of the Chinese sample showed that the type of framing effect was unidirectional, characterized by predominant risk seeking under both framing conditions, with more risk seeking under the negative frame than the positive frame. The framing effect was evaluated using the balanced format condition as an objective measure of the existing risk preference. Results suggest that the military participants were influenced by both positive format and negative format, and in the Chinese civil sample the negative format had an important effect. These findings expand the literature on risk decision by demonstrating the framing effect and comparing results from Chinese and American participants.