Impact of Extreme Decisions and Extreme Probabilities on Attribute Framing Effects

By William A. Kerler III, Christopher D. Allport, A. Scott Fleming

This study examines attribute framing in a capital budget decision-making scenario.  In an experiment utilising 183 participants, we test the impact of extreme probabilities on the investment decision making process.

Results indicate that the presence of attribution frames may be problematic in certain decision-making scenarios and that framing effects may be stronger and more persistent than prior theory suggests.

This research adds to the literature through an extension of the understanding of the attribute framing phenomenon on capital budgeting decisions.  it is important in that it highlights the potential for sub-optimal decision-making in that attribute framing is not easily moderated, even when utilising extreme probabilities in the capital spending approval process.

JAMARv13.1-Framing Effects


About Prof Janek Ratnatunga 1129 Articles
Professor Janek Ratnatunga is CEO of the Institute of Certified Management Accountants. He has held appointments at the University of Melbourne, Monash University and the Australian National University in Australia; and the Universities of Washington, Richmond and Rhode Island in the USA. Prior to his academic career he worked with KPMG.
Scroll to Top