Overall Summary of Article!

Dissecting the Risky-choice framing effect: Numeracy as an individual-difference factor in weighting risky and riskless options. Peters and Levin (2008)

This article using the variants of the Asian Disease Problem tried to dissect the risky-choice framing effect. This demonstrated the way in which choices in decision making are advertised, based on whether they are positively or negatively framed. Whereby the participants had to provide preference ratings for the full decision problem and provide attractiveness ratings for each of the component parts i.e the sure-thing option and the risky option. Overall findings showed that the risky choices were made by participants choosing the negatively framed versions. During this article it looked at participants with differences in their numerate levels. Some were highly numerate and some had low numeracy. The results showed that the less numerate had a large effect of frame above and beyond their options, whereas the high numerate were almost completely accounted for by their attractiveness ratings.

Numeracy refers to the ability to understand and use mathematical and probabilistic concepts. In the US approximately half the population has difficultly with simple numeric tasks. Therefore it is not surprising that greater ability with numbers leads to more comprehension of numeric information in important decisions.

Peters et al (2006) Found that high numerate participants being more likely to retrieve and use appropriate numerical principles. And transform numbers in one frame to another.

There were 4 hypothesis is this article, but the main one was to replicate the Risky-choice Framing effect and that the risky choice rather than the sure-thing option will be preferred. Which ultimately it was found in the results.

During the task the participants were assigned to a positive or negative frame. There was a full scenario task and the participants had to rate the attractiveness of the Sure thing and Risky choice option. They were then asked to fill out a demographic from which aimed to discover whether they were highly or less numerate.

It was found that because the less numerate are less able to translate, therefore their results will be less reliable. Although the less numerate showed a larger framing effect. Alternatively the highly numerate understood the choices and numbers more effectively, therefore made more accurate and complex decisions.

Overall this shows that people who have greater numerate skills are able to integrate complex numerical information in the construction of their preferences as they have a greater working-memory capacity. Therefore there are individual factors in weighting risky and riskless options.