Lecture 4: Gain-Loss Framing, The Disease Problem

For this weeks lecture our reading was on framing effects. This is when that the wording of a problem influences a persons preferences and choice.

Tversky and Kahneman illustrated the framing effect in 1981 with their 'disease problem'. The problem was as follows:

The participants are told to imagine that the U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. They are told to choose one of these two alternative programs to combat the disease:

A) 200 people Will be saved.

Or B) 1/3 probability that 600 people will be saved, and 2/3 probability that no people will be saved.

Another group were asked to choose between the two following prospects:

C) 400 people will die.

Or D) 1/3 probability that no one will die and 2/3 probability that 600 will die.

Which would you choose? I chose A then D. I think i chose A because i would of felt bad if i chose B and no one got saved which is the worst possible scenario. Then i chose D because the prospect of 400 dying seemed worse than 200 living, which i retrospect it exactly the same! My choice could be explained be The Prospect Theory that argues people will chose the most risky choice in the loss frame. However it goes against the Expected Utility Theory which says framing prospects should have no effect on preference.

The study shows that the majority of people answer A which is the certain option in the first set, and D which is the risky option in the second set! This finding is peculiar because one would expect that if you answer A out of the first two programs then you should answer C out of the second two. Or that B and D would be picked, because it was supposed that A and C and B and D were the same outcomes just described in different ways!! The only posible explanation for this is a frammimng effect.

However, Kuhberger in 1995 said that the framing effects were due to ambiguity in the description of prospects A and C. They have missing information as they do not make it clear what is going to happen to all the 600 people! Participants may think that, in A the remaining 400 people unaccounted for, some of them may still survive.

The article i read: Gain-Loss Framing and Choice by David Mandel, was about a new experiment that he devised to test whether this ambiguity in the questioning was what caused the framing effect and if different formulations of negative and positive framing had an effect on choice. This was done using the subtractive method, in which the ambiguous descriptions (A and C) were left the same and the fully described prospects (B and D) had information subtracted from them. Therefor controlling for asymmetries. Mandel also changed the wording of the scenario to one which was happening in the present rather than in the future. He also asked the participants to actually imagine they were one of the 600. This was to make it more realistic to the participant. I think this is very relevant as i believe that the descriptions were not equal in the original as A and C were far more ambiguous, and that the problem seemed very distant and i did not take it very seriously!

Mandel found that framing was not as pervasive or roust as T & K had once considered. However the ambiguity of a problem can have an effect on choice.

I found this paper a lot more easy going than the previous papers, perhaps because i found it more interesting and easier to understand. We discussed it in class with our groups which is always useful, to get others opinions on the text. This week our group did not present anything in front of the class, so must be prepared to do so next week! So plan to start the reading for next week asap!