Decision Under Uncertainty: An Experimental View

Abstract

This work (experimental research) is based on Prospect theory, which was developed by D. Kahneman and A. Tversky in 1979. This is one the most quoted and best-documented point of view in economic psychology. First of all, it replaces, once again, the notion of utility with value. But value is defined in terms of gains and losses and this, according with an irrational human tendency to be less willing to gamble with profits than with losses. So, we discover the great importance of these assumptions in the field of risk individual decision-making. n experimental study was conducted to examine the influence of elaboration and the way in which alternatives are phased on decision. Subjects were undergraduate psychology students randomly assigned to one cell of a 2x2 design (high- and low-elaboration conditions; positive and negative decision frame versions). In the low-elaboration condition, a framing effect (Tversky & Kahneman, 1979) was observed: most of the subjects chose the riskless option when decision options were phrased positively in terms of gains, whereas most chose the risky option when options were phrased negatively in terms of losses. However, in the high-elaboration condition, the framing effect was not observed.