A Test of Narrow Framing and its Origin

Luigi Guiso, European University Institute, EIEF & CEPR

“Narrow framing” explains why individuals turn down small positive expected value lotteries. Participants in the 2007 Pioneer Investments- UniCredit Survey have been asked specific questions in this respect on a random order basis. It runs out that, consistently with narrow framing, individuals who were induced to bring their earnings risk to mind before facing the decision are significantly less likely to turn down lotteries .

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