This study replicates and extends Dusenbury (1994). A sample of 132 New Zealand taxpayerparticipantsperformed a laboratory experiment consisting of four decision problems relating totax situations and two decision problems relating to other financial contexts. The focus ofinterest was the power of each tax context's stated prepayment position to induce a decisionframe (as predicted by Prospect Theory) capable of determining each participant's riskpreferences. The use of a repeated measures analysis of variance procedure (general linearmodel) allowed for within-subject comparisons so that decision-frame-induced shifts inindividual participants' risk preferences across decision problems could be diagnosed. Thestudy found, with respect to the tax problems, that the predictions of Prospect Theory and thefindings of Dusenbury (1994) were generally supported. However, similar risk preferenceshifts based on alternative decision frames, independent of prepayment position and all othercontextual information, were also detected.When within-subject comparisons were also generated by contrasting of tax and non-taxdecision problems, identical apart from context, it was found that participants producedevidence of dissimilar, context-sensitive risk preferences. Risk preferences were also found tobe stable for decision problems containing identical option sets and similar, but not identicalcontexts. Also, a significant behavioural difference was detected between participants withhigh cash floats and those with low cash floats; but this was not differentiated from anawareness of cash float status variable in the study. Finally, while the underlying valuefunctions of the participants conformed to the predictions of Prospect Theory in the taxcontexts, there were some departures from the predicted form when the decision problem wasset in a gambling context.
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