Abstract

The framing effect is a phenomenon by which decision-making in humans is influenced by the language or context in which background information is presented. In our experiment, we sought to examine the influence of payoff size (or magnitude of the consequences as determined by the background information) on the framing effect. We proposed three following: 1) the framing effect does exist, 2) people tend to be more risk-seeking in low-payoff scenarios, and 3) the framing effect will be more pronounced in high-payoff scenarios. To test our hypotheses, we used an eight-question, forced-choice questionnaire that presented subjects with both gain-framed and loss-framed scenarios with high-payoff and low-payoff conditions. The results of the experiment support the first two hypotheses, but not the third; the framing effect was actually more pronounced in the low-payoff scenarios. From these results, we can conclude that the framing effect does exist and that payoff size exerts a significant influence on the framing effect.