Explaining risky choices with judgments: Framing, the zero effect, and the contextual relativity of gist.

Contemporary theories of decision-making are compared with respect to their predictions about the judgments that are hypothesized to underlie risky choice framing effects. Specifically, we compare predictions of psychophysical models, such as prospect theory, to the cognitive representational approach of fuzzy-trace theory in which the presence or absence of zero is key to framing effects. Three experiments implemented a high-power design in which many framing problems were administered to participants, who rated the attractiveness of either the certain or risky options. Experiments also varied whether truncation manipulations were within-subjects or between-subjects and whether both options were present. Violations of both strong and weak rationality were clearly observed in attractiveness ratings of options. However, truncation effects showed that these violations were conditional on the form of the decision problem. Truncation effects that involved adding or subtracting zero-that should not matter in almost all decision theories-showed that such rationality violations were attenuated when zero was deleted, but were amplified when zero was emphasized, per predictions of fuzzy-trace theory. This is the first such demonstration using attractiveness ratings of certain and risky options. Ratings also revealed that framing effects are inherently comparative: The attractiveness of a given option is a function of zero versus nonzero contrasts both within and between options. Indeed, we observed a losing-nothing-is-better effect that violates attribute framing and prospect theory such that a probability of losing nothing was rated as substantially better than a probability of gaining nothing, in accord with fuzzy-trace theory. (PsycInfo Database Record (c) 2021 APA, all rights reserved).