The framing of Decisions and the Psychology of Choice by Amos Tversky and Daniel Kahnerman (1981)

By definition, humans are rational and thinking beings. In fact, homo sapiens mean thinking man, rational man, knowing man and wise man. Therefore, it is no surprise that we tend to hold the belief that our decisions are based on rationality. This is reflected in the way in which media portrays crime, violence and love as something that can be analyzed and discussed.  However, scientific evidence suggests that we do not always make our decisions based on rationality.

In a research study published in Science, the authors present several examples of how  decisions that should be made solely based on mathematical deductions are influenced by other factors such as the framing of the problems. Tversky and Kahnerman (1981) argue that framing of problems affect the overall perception of the problem which then influences the kind of decisions made. This was tested out in several studies about choices regarding money and the loss of human lives.

In a clear example presented by Tversky and Kahnerman (1981), the research subjects were asked to make decisions based on the following scenario and options.

Problem 1: Imagine that the U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the scientific estimate of the consequences are as follows:

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72 percent of the respondents chose Program A, while 28 percent chose Program B.

Then, a second group of research subjects were presented the same scenario and presented with the following exact scientific estimate of the consequences.

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For these options, 78 percent favored Program D, while 22 percent favored Program C.

Program A is identical to program C, whilst program B is identical to program D. How then do we explain the difference in choices amongst the respondents? According to the authors, this seemingly incomprehensible conclusion results from how the questions are framed and based on one fundamental fact about human beings. As human beings, we hate to lose more than we like to win.

According to Tversky and Kahnerman (1981), people have a tendency to engage in risk-taking behavior when they are presented with a negative frame and more likely to avoid risks in positive frames. This is evident in the above mentioned example when the same situation was presented in different frames. Program A and B is framed according to the number of people that will be saved, a positive way of framing, whereas Program C and D is framed according to the number of people that will die, a negative way of framing.

Such framing affects decisions in the evaluation of prospects, acts, contingencies and outcomes in numerous ways. In fact, this knowledge is being employed often in politics, gambling, marketing, business negotiations and even in our daily negotiations with our family and friends.

Questions I’d like to pose to my readers:

1) Do you agree or disagree with the framing and prospect theory?

2) What are some other examples where the framing theory is being used?

3) How do you think people can make better and more rational decisions and avoid being manipulated?

References

Tversky, A. & Kahnerman, D. (1981). Science, New Series, Vol. 211, No. 4481 (Jan. 30, 1981), pp. 453-458.

– ischmimi

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1 comment so far

  1. yyeweii on

    I agree that as humans, we hate to lose more than we like to win and I also agree with Tversky and Kahneman’s framing and prospect theory to a large extent. Although some of us may not want to win as much as others, we all do not like to lost what we have currently.

    Many examples of Tversky and Kahneman’s framing theory can be found in most payment, banking and finance situations. An example will be how students can demonstrate susceptibility to framing when reminded to pay a mandatory registration fee. Hence, most students will tend to register early when presented a loss frame, in the form of a penalty fee, as opposed to students who will register early when presented a positive frame in the form of a discount.

    In my opinion, it is hard to determine how people can avoid being manipulated by framing as each individual perceive losses and gains differently. While one may be unaffected by a particular framing, others might be susceptible to it. I feel that we can only try our best to assess the situation rationally when facing such framing.


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