FramingGroup A

Group Members:Shahram Moradi

Ali Mansouri

Under Supervision of Dr. M.T. Isaei

Content

Introduction

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Introduction Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Decision/Choice

Judgment

Mental Representation

Decision Problem

What is a Frame?

Refers to a mental model of the decision

problems, used to solve them

Frame

DifferentFrames

Different ways of looking at the same

problems

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

To Frame, or To Be Framed?

Decision Makers use information in the

context of the Frame without Reframing it

Concreteness Principle

• Previous patterns & Experience

• Norms & Expectations

• Desire for simplicity • Habits

Framing depends on

some Factors

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Framing Types:

Outcome Framing

Structure Framing

Task Framing

Loss-Aversion as Outcome Framing

Effects

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Outcome Framing Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Framing as Gains or Losses

Framing as aggregate or disaggregate Quantities

Framing by scaling the outcome in a different currency

Framing as Gains or LossesAsian Disease Which is expected to kill 600 people

%72

%28

Survey

200 people will be saved

600 people will be saved

No people will be saved

A

B

0.33

0.66

Problem 1

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Asian Disease Which is expected to kill 600 people

%22

%78

Survey

400 people will die

Nobody Will die

600 people will die

C

D

0.33

0.66

Problem 2

Different Framing of Outcomes

Risk – Aversion

to Risk -

Seeking

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Risk Situation

Profit

Risk Averse

LossRisk Seek

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Prospect Theory

concave

convex

Risk- Seeking Behavior

Risk- AversionBehavior

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Insurance

Actual lossLoss with

high probability

INSURANCE???

PAD strategy(Pennies-a-Day)

Enjoy riding your own motorcycle for

only $1 a day!!!

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Loss Aversionand Outcome Framing Effects

$1500

$ 3000

Nothing

%65

%35

Survey

A

B

0.50

0.50

Problem 3

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

-$1500

-$ 3000

Nothing

%28

%72

Survey

A

B

0.50

0.50

Problem 4 You are given $3,000

Loss Aversion

Reduction in

Risk - Aversion

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

The Endowment effectAn immediate consequence of Loss Aversion

People’s willingness to demand more than to pay for something

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

The Sunk-Cost Effect

Some Past Investment

Continue

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Advantages and DisadvantagesIntroduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Job Social contact Daily travel time

Present job

Isolated for long stretches

10

Job X Limited contacts with others

20

Job Y Moderately sociable 60

Job Social contact Daily travel time

Present job

Much pleasant social interaction

80

Job X Limited contacts with others

20

Job Y Moderately sociable 60

Gain LossLoss Gain

Other Outcome Framing Effects

Status quo Bias Tendency to retain the

Status quo

Reluctance to

chooseEvaluation of forgone

Alternatives more highly after decision making

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Structure Framing

The size and arrangement of the decision maker’s

view

Three ways

The Integration and Segregation of

Information

Sequential Framing of contingent events

The Scope of the Frame

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

The Integration and Segregation of Information

$ 250

-$750

%0

%100

Survey

E

F

0.25

0.75

Problem 5 $ 240

-$760

0.25

0.75

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Surve

yProblem 6

Dec. # 1

A

B

0.25

0.75

$240

$ 1,000

Nothing

%84

%16

-$750

-$ 1,000

Nothing

Dec. # 2

C

D

0.25

0.75

%13

%87

%73

%0

A D E

%3 %100

B C F

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Sequential Framing of Contingent Events

Problem 7 Two Stage Game

%25 chance to move into the 2nd Stage%75 chance to lose the game

A : a sure gain of $30B: %80 chance to win $45

C: %25 chance to win $30D: %20 chance to win $45

Problem 8

%74

%26

%42

%58

Task Framing

Decision as

Reject options from the set

Choose one option from the set

Result

Different Weighting of Positive/Negative Features

of options

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Task FramingProblem 9 Sole–Custody of

child Parent A :

Average income Average health Average working hours Reasonable rapport with the child Relatively stable social life

Parent B : Above-Average incomeVery close relationship with the childExtremely active in social lifeLots of work-related travelMinor health problems

%36

%64 %55

%45

Award

Deny

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

conclusion

Framing matters not only in experimental investigations, but also in the real world

People accept any Frame that is presented to them passively

Looking Differently to subjects will result in Different decisions

Introduction

What is a Frame

Outcome Framing

Loss Aversion

Structure Framing

Task Framing

Conclusion

Thanks for your

attention