Framing Effect

The focus of my last lecture was on framing effect. As this blog is about judgement and decision making it is crucial to mention how framing questions and sentences in a choice between 2 problems can influence our decision. Our task was to read the article by Daniel Kahneman and Amos Tversky called " Choices, Values, and Frames". This study considers normative (logic and rational) and descriptive (preference and beliefs) analysis under risk and risk less choices.. Next they move on the principles of analysis of rational choice which incorporate 2 principles; dominance ( if prospect A is as good as B in all respects and better than B in at least one respect then A should be preferred) and invariance which requires that preference should not depend on the way choice problem is described, more importantly 2 problems shown together or separately should yield the same outcomes. By bringing up the framing of outcomes theory they prove that invariance in most situation can not be satisfied.

Consider problem that authors described in their study (1984, 343)

U.S. prepares for outbreak of dangerous Asian disease which is expected to kill 600 people. 2 different programs were proposed to combat the disease. Estimated consequences of these programs are as follows;

1.

If program A is adopted 200 people will be saved (72%)

If program B is adopted there is 1/3 probability that 600 people will be saved and 2/3 probability that no one will be saved.

150 respondents were considering this problem. As predicted majority are risk averse and chose program A,a as in problem B we do not save anyone for sure, there is only a probability of saving people.

Now consider another problem in which same story is followed with different description of a problem associated with 2 programs.

2.

If program C is adopted, 400 people will die (22%)

If program D is adopted there is 1/3 probability that nobody will die and 2/3 probability that 600 people will die (78%)

Problem A and B is the same as C and D. However problem D has an option that no one will die therfore people are more risk seeking and go for the gamble. There is more risk seeking in the second problen than there is risk averse in the first.

It is a prove for failure of invariance.

Now lets consider the Formulation effect. The authors suggest that formulation effect can occur without people being aware of the impact of the frame on their decisions. In lung cancer example we can clearly see the impact of a frame effect; in the choice between therapies for lung cancer the outcomes were described in terms of morality and survival. As surgery entails risk of deth, this option was less attractive when statistics of treatment were described in terms of morality than when they were described in terms of survival. The framing effect is very popular in political world, therefore we should be aware of it.