Framing Effects on Risk-Taking Behavior: Evidence from a Field Experiment

36 Pages Posted: 4 May 2020

See all articles by Pau Balart

Pau Balart

University of the Balearic Islands

Lara Ezquerra

Universitat de les Illes Balears

Iñigo Hernandez-Arenaz

University of the Balearic Islands

Date Written: March 18, 2020

Abstract

We exploit testing data to gain a better understanding of the influence of framing effects on decision-making and performance when facing risk. In a randomized field experiment we modified the framing of grading instructions of multiple-choice tests. In the business-as-usual framing (BAU framing), correct answers were framed as gains while wrong answers were framed as losses. Under our proposed loss framing, both non-responses and wrong answers were presented in the loss domain. According to our theoretical model, we expect the change in framing to decrease student non-response and increase student test scores. Our experiment confirms that framing matters for risky decisions in the context of testing. It reveals that under the loss framing, student non-response is reduced by 17%-19%, with risk-aversion being the main candidate for explaining this reduction. However, it fails to increase students’ scores. Indeed, our results support the possibility of impaired performance under the loss framing.

Keywords: Framing, Prospect Theory, Loss Aversion, Risk-Taking, Test-Taking, Non-Response, Field Experiment

JEL Classification: C93, D01, D81, D91, I29

Suggested Citation

Balart, Pau and Ezquerra, Lara and Hernandez-Arenaz, Iñigo, Framing Effects on Risk-Taking Behavior: Evidence from a Field Experiment (March 18, 2020). Available at SSRN: https://ssrn.com/abstract=3556710 or http://dx.doi.org/10.2139/ssrn.3556710

Pau Balart

University of the Balearic Islands ( email )

Crtra. Valldemossa, km 7.5
Ed. Ramon Llull
Palma de Mallorca, 07122
Spain

Lara Ezquerra (Contact Author)

Universitat de les Illes Balears ( email )

Carretera de Valldemossa km7.5
Palma, 07122
Spain

Iñigo Hernandez-Arenaz

University of the Balearic Islands ( email )

Crtra. Valldemossa, km 7.5
Ed. Jovellanos
Palma, Illles Balears 07122
Spain

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