The Best Theory of Decision Making for Framing, Responsibility and Experience
Barkah Susanto, Zulfikar Bagus Pambuko, Nur Laila Yuliani

Universitas Muhammadiyah magelang

Abstract

Previous studies established that the information framed in different ways leads to distinct decisions. In general, framing is tested using two main theories, including Prospect and Fuzzy-Trace. This study compares the two theories to determine the better one in explaining a phenomenon. It also examines two conditions that might influence decision making regarding risk-taking or avoidance.
Additionally, the study focuses on four main things, including preparing for decision alternatives, precisely positive frame, and negative frame, Making decision alternatives with a different theory, precisely Prospect Theory and Fuzzy-Trace Theory, the level of responsibility for previous related choices, and preparing for decision makers, experience and not experience. Experimental research was used with a between-subject design 2x2x2x2. The participants include 81 doctoral students for a real experiment.
The results of the study showed that decision making is different when information is framed positively or negatively. In using different theories for decision making, a considerable number of individuals are willing to take risks, though many also avoid. When someone is responsible or not for the initial investment, different decisions are made. The results of this study show that the fuzzy-trace theory was stronger in explaining the influence of framing than the prospect theory. Additionally, the statistical test on the data collected shows that all hypotheses were supported empirically.

Keywords: Framing, Prospect Theory, Fuzzy-Trace Theory, Responsibility

Topic: Economics