DIS 280 Social Science Research Methodology: Problem Framing Dr. John V. Richardson, Professor UCLA GSE&IS Department of Information Studies

Presentation Outline Problem Framing and Social Dilemmas Risk Taking Propensity (Classical Utility Theory) 1) Risk avoidance/aversion or 2) Risk seeking Formulation Effect Positively (“gains”) or Negatively framed (“losses”) Assumptions about Decision Making in Ambiguous and Uncertain Situations Role Playing Exercise 1: Programs A and B Exercise 2: Programs C and D

Risk Aversion “Risk aversion denotes a preference for a certain outcome over a gamble that possesses equal or higher expected value.” SOURCE: Michael J. Roszkowski and Glenn E. Snelbecker, “Effects of ‘Framing’ on Measures of Risk Tolerance,” Journal of Behavioral Economics 19 (1990): 237-8.

Risk Seeking “Risk seeking refers to the rejection of a certain outcome in favor of a gamble of equal or lower expected value.” SOURCE: Michael J. Roszkowski and Glenn E. Snelbecker, “Effects of ‘Framing’ on Measures of Risk Tolerance,” Journal of Behavioral Economics 19 (1990): 238.

Assumption One “It is commonly expected that individuals will reverse decisions or change behaviors which result in negative consequences.” SOURCE: Barry M. Staw, “Knee-Deep in the Bid Muddy: A Study of Escalating Commitment to a Chosen Course of Action,” Organizational Behavior and Human Performance 16 (1976): 27.

Assumption Two “Describing the objective risk inherent in a situation in terms of how much can be ‘gained’ will lead to risk avoidance whereas describing the same exact situation in terms of the potential ‘losses’ to be suffered leads to risk-seeking behavior.” SOURCE: Michael J. Roszkowski and Glenn E. Snelbecker, “Effects of ‘Framing’ on Measures of Risk Tolerance,” Journal of Behavioral Economics 19 (1990): 237.

Assumption Three “People underweight outcomes that are merely probable in comparison with outcomes that are obtained with certainty.” Termed the certainty effect… SOURCE: Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision Under Risk,” Econometrica 47 (March 1979): 263.

Exercise 1: Programs A and B Imagine that the U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimate of the consequences of the programs are as follows: If Program A is adopted, 200 people will be saved. If Program B is adopted, there is a 1/3 probability that 600 people will be saved, and a 2/3 probability that no people will be saved. Which of the two programs would you favor?

Take Your Time…

Exercise 2: Programs C and D Imagine that the U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimate of the consequences of the programs are as follows: If Program C is adopted, 400 people will die If Program D is adopted, there is a 1/3 probability that nobody will die, and a 2/3 probability that 600 people will die. Which of the two programs would you favor?

Take Your Time…

Results of Programs A and B Based on a sample size of 152: Program A (200 saved) favored by 72% Program B (1/3 probability that 600 saved vs 2/3 probability no body saved) favored by 28%

Results of Programs C and D Based on a sample size of 155: Program C (400 die) favored by 22% Program D (1/3 nobody will die vs. 2/3 600 will die) favored by 78%

Discussion Risk seeking when ‘lives lost’ frame (D over C) employed Risk averse when ‘lives saved’ frame (A over B) employed

Implications Preceding exercises are examples of Herbert A. Simon’s ‘bounded rationality’ – impediments to rational decisions… So, LIS problems would be solved (i.e., funded) more often, if we…

Bibliography N.S. Fagley and Paul M. Miller, “The Effect of Framing on Choice,” Personality and Social Psychology Bulletin 16 (September 1990): 496-510