Psychology 458/558
Judgment and Decision Making
Prof. Bertram Malle
Fall 1995

Lecture 5: Oct 12
Framing and context

Postscript to Lecture 4

The "pseudocertainty effect" refers to people's unwillingness to consider the conditional nature of many decisions and the resulting tendency to overweight supposedly "certain" outcomes in a chain of probabilistic events (even though these outcomes may never be reached). Example1: Two-stage game by Kahneman & Tversky. Example 2: offering a job to one of two candidates who have different probabilities of accepting the offer and different probabilities of becoming "stars" if they accept.

1. Framing of gains and losses

Examples: Asian disease vignette in assigned article, employee lay off vignette in class. Why are responses so different in the two framing conditions? The "saving" frame sets the loss as the reference point, and any better outcome than the worst one is seen as a gain (leading to risk-averse decisions). The "losing" frame sets the current state as the reference point, and any deviation from that is seen as a loss (leading to risk-seeking decisions). An example to think about: Framing your weekend either as "no-work" (in which case a small amount of work will be a loss and thus very unpleasant) or as "both-work-and-play" (in which case a small amount of work will be a gain and thus relatively pleasant).

2. Context dependence

Contrast effects: Sensory system, attitudes, impressions, daily mood fluctuations, restaurant visits. What can you do? Don't only seek out pleasures, don't always look only for the best, use downward comparisons (e.g., think of a time in your life when you felt worse).

Assimilation: When stimulus A and stimulus B are very close together, you assimilate them rather than seeing B in contrast to A (e.g., evaluating first Reagan, then Bush). Also, as long as your affective reaction to A is lingering, you reaction to B may be similar (e.g., how you feel on the evening of a bad day vs. the next morning).

Standards of comparison: Cameras or CD player in Shafir et al. paper (the options within a set provide information about their worth and "anchor" you on some standard); beer on the beach from a resort hotel or a run-down grocery store; jacket + calculator purchase with discount ("transactional utility" = getting a good deal)

Primacy + recency effects: Order of dishes on a menu, school visits, impressions. What can you do? Counterbalance! Randomize order!

In conclusion, we cannot make context-free decisions. Our preferences, beliefs, attitudes, are not "read out" but composed in a particular context. You can use knowledge of such contextual influences to become more aware of the way your decisions are composed and possibly change them, if you want to. You could also use that knowledge to be a bit more charitable when evaluating decisions that you or other people have made.