Risk-Taking Behavior and Effects of Framing in Group and Individual Decisions: Evidence from Chamas and Student Subjects in Kenya

This study investigates risk-taking behavior in the context of group and individual decisions among chamas (informal savings and investment groups) and students in Kenya. Moreover, by comparing two presentation formats, we explore how framing techniques impact decision-making processes for these two populations. The study adopts an experimental approach with subjects selected from chamas and students in Kenya, representing different decision-making contexts. Subjects are presented with lottery choice tasks, where decisions and risk preferences are observed at the individual and group level. Chamas display significantly greater risk aversion than students in both formats of the lottery choice task and at both the individual and group level. Additionally, both at the individual and group levels, we find evidence of framing effects for chama decisions. However, the study found no significant evidence of framing effects for student decisions at the group level, but it did find evidence for framing effects for student decisions at the individual level. The findings contribute to understanding the role of information framing in financial decision-making and have practical implications for organizations, policymakers, and financial institutions. This study also highlights the importance of cultural considerations in examining risk-taking behavior. By conducting the research in Kenya with chamas, we provide valuable insights into decision-making in a specific cultural context, broadening the generalizability of findings.