Framing effects can alter decision outcomes from "summary" of Judgment in Managerial Decision Making by Max H. Bazerman,Don A. Moore
Framing effects refer to the way in which choices are presented to individuals. The framing of a decision can significantly influence the outcome, even when the choices being presented are objectively the same. This is because individuals tend to rely on mental shortcuts, or heuristics, when making decisions. These heuristics can lead to biases in judgement and decision-making. When a decision is framed in a positive light, individuals are more likely to take risks. On the other hand, when the same decision is framed in a negative light, individuals tend to be more risk-averse. This demonstrates that the way a decision is framed can alter the perceived risks and benefits associated with that decision. One classic example of framing effects is the "Asian disease" study by Tversky and Kahneman. In this study, participants were presented with two different scenarios for addressing a hypothetical disease outbreak. The first scenario emphasized the potential benefits of a treatment program, while the second scenario highlighted the potential costs of not implementing the program. Despite the scenarios being logically equivalent, participants were more likely to choose the treatment program when it was framed in terms of benefits rather than costs. Framing effects can also be observed in real-world business situations. For instance, when presenting a new product to consumers, a company can choose to highlight either the features of the product or the potential drawbacks of not purchasing it. The way in which the product is framed can influence consumers' perceptions and ultimately their decision to buy.- Framing effects play a crucial role in decision-making processes. By understanding how choices are framed and the biases that can result from these frames, individuals can make more informed decisions. It is important to consider the framing of a decision and how it may impact the outcomes before making a choice.
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