Framing Effects and Confidence in Judgment

Abstract

This paper addresses the relationship between framing effects and decision makers' confidence in their judgments. In an experimental setting, a sample of financial officers of sixty medium size organizations were asked to evaluate the likelihood of making an investment in a series of four joint ventures for oil and gas exploration based on different sets of probabilities and payoff information for each joint venture. Subjects were also asked to provide a rating of confidence in their judgment. The results indicate that subjects' rating of the likelihood of making investment decisions are affected by information frame and payoff information. However, confidence ratings were not significantly affected by information frame.

Changing Decisions: The Interaction between Framing and Decoy Effects

“…This phenomenon suggests that individuals’ decision confidence in the choice made increases when the decoy option is present and favors the framed option. Many studies have looked at the level of confidence during decision-making processes [ 29 ]. However, none of these studies focused on decision confidence after choices in the context of the interplay between decoy and framing effects.…”

“…Changes in decision confidence have been investigated in the context of decision-making biases such as framing and decoy effects as well as anchoring, truthfulness, and familiarity biases [ 25 , 26 , 27 , 28 , 29 , 30 ]. Importantly, research investigating decision confidence highlights that a low degree of confidence in a choice can result in the decision maker questioning or revisiting their decision [ 31 ].…”

“…However, this study showed that decision confidence was not significantly affected by how the information was framed. Indeed, no significant difference in the subjects’ confidence ratings was detected between the negative framing and the positive framing conditions [ 29 ]. Nevertheless, Sieck and colleagues [ 32 ] found increased decision confidence when individuals were asked to write down the reasoning behind their decisions.…”