Making decisions is something we have to deal with on a daily basis in every situation. The decision-making process becomes more complicated when we have a multitude of options to choose from. There is also the possibility that our irrational human quality is influenced by the way a piece of information is formulated: this could influence our judgments and decisions.
The reason why this happens to us is known as “frame effect“. A framing effect occurs when people react differently to different but objectively equivalent descriptions of the same message. Wording tends to heavily influence our decision-making. When choosing between safe and risky options with identical expected values, people are often driven by emotions. They tend to choose the risky option more often when the choice is framed in a negative frame than in a positive one.
Many studies conclude that emotions are the basis on which decisions are made. The influence on decision-making comes from two types of emotions: the expected and the immediate. The expected emotions are the ones we are likely to feel once the consequences of our choices materialize. The immediate emotions are the ones we felt when we made a decision. In addition, the way in which data is presented to us plays a relevant role and can strongly influence our emotions.
The psychologists explain this effect Daniel Kahneman And Amos Tversky have conducted some very illustrative experiments. The first was about a hypothetical Asian disease expected to cause 600 deaths. The participants were divided into two groups and the same solutions with two different formulations were presented.
The first group were presented with positively framed options:
- 200 people are saved.
- 1/3 chance of saving everyone (no dead), 2/3 chance of saving no one (all dead).
For the second group, the solutions were presented in the negative sense:
- 400 people die.
- 1/3 chance no one will die and 2/3 chance 600 people will die.
If we rationally analyze the different options, we will find that options AC and BD are equivalent in content but worded differently. The results were amazing: the majority of the participants in the first group chose option A, while in the second group the majority preferred the opposite option D. These results revealed a clear inconsistency in the choices made, which are directly related to the way the solutions were presented.
The second experiment consisted of the following questions:
- “You must undergo a medical operation that has a 10% chance of being fatal. Would you agree to that?”.
The majority of people replied that they would refuse the surgery.
- “They have to undergo a medical procedure, which in 90% of the cases has no consequences. Would you agree to that?”.
The majority of people replied that they would accept it.
Likewise, in this example, the results of the proposed operation are identical, and both sentences mean exactly the same thing. However, our brain evaluates the meaning of the information received differently and is more inclined to give an affirmative answer depending on how the sentence is worded.
Our brains deal differently with the prospect of gain or loss, which affects our personal assessment of a problem by giving two opposite answers to the same question.
The results show how people tend to avoid risk when there is a positive event and seek it when there is a negative one. Therefore, people perceive the harm caused by a potential loss more than the benefit of the potential gain.
The framing effect results from relying on an emotional, intuitive, and rapid form of thinking rather than a rational and reflective form of mental operation. More specifically, a safe win is emotionally attractive compared to an equally risky option, and conversely, safe losses are emotionally aversive and risk-seeking.
Written by Riccardo Pandini.
Did you read?
The Chance for Success in 2023 is Yours, by Ingrid Maynard.
A world-class family business involves collective learning from Wendy Sage-Hayward.
Leading as a Purple Making by Dr. Chip R. Bell.
The new arena of tourism entrepreneurship by Prof. (Dr.) Manoj Joshi.
POST PANDEMIC LEADERSHIP: New leadership challenges with positive impact by Glenn Parker.
Follow the latest news live on CEOWORLD magazine and get news updates from across the United States and around the world. The views expressed are those of the author and not necessarily those of CEOWORLD magazine.
Follow CEOWORLD magazine headlines on: Google News, LinkedIn, Twitter and Facebook.
Thank you for supporting our journalism. Subscribe here.
For media inquiries please contact: [email protected]
Comments are closed.