Framing Effects in the Elicitation of Risk Aversion: An Experimental Study

In most risk elicitation tasks, lotteries are presented through a verbal description stating the outcomes and their likelihoods (e.g., "Win $5 with probability 10%", "1 in 10 chance to win $5"), sometimes accompanied by a pictorial representation (a pie chart or bar graph). Literature on risk communication suggests that alternative but supposedly equivalent numeric formats (e.g., percentages vs ratios) and pictorial displays (e.g., continuous vs discrete) may lead to a different perception of risk and concern for it. The present experiment (N = 95) tests for numeric and pictorial framing effects in a multiple price list (MPL), where risk information is presented either as percentages ("10%") or as ratios ("1 out of 10") and is accompanied by either two-slice or ten-slice pies. Results show that neither the numeric framing (adopting ratios) nor the pictorial framing (slicing pies) significantly altered per se the average elicited risk aversion. Nonetheless, the pictorial framing significantly reduced the elicited risk aversion for those participants who focused on the probability of the lottery's high outcome in their decisions.