Topic: risk aversion

Framing effects in individual decision-making have puzzled economists for decades because they are hard, if at all, to explain with rational choice theories. Why should mere changes in the description of a choice problem affect decision-making? Here, we examine the hypothesis that changes in framing cause changes in the allocation of attention to the different options – measured via eye-tracking – and give rise to changes in decision-making. We document that the framing of a sure alternative as a gain – as opposed to a loss – in a risk-taking task increases the attentional advantage of the sur