Framing

Framing has been described as a process of structuring the right question, ie

"...defining what must be decided and determining in a preliminary way what criteria would cause you to prefer one option over another..."

Corporate Learning Network 2019

An example for this was with Pepsi-Cola endeavouring to compete against Coca-Cola in the 1970s. Pepsi's executives believed that Coca-Cola's distinctive hourglass-shaped bottles was the most important competitive advantage for Coca-Cola, ie

"...it made Coke easier to stack, more comfortable to grip, and more sturdy to withstand the vending machines' drop..."

John Sculley as quoted by Corporate Learning Network 2019

After nearly 2 decades and several million dollars worth of money invested to redesign Pepsi Cola's bottle to compete effectively with the current bottle, Pepsi-Cola's executives realised the problem was incorrectly framed.They needed to ask Peter Drucker's 4 questions, ie

"... - Who is the customer?

     - How does the customer use what he or she buys?

     - What does the customer value?

     - What are the realities of the customer?

Peter Drucker as quoted in Corporate Learning Network 2019

Pepsi-Cola use these questions to study its customers. The results of the study surprised Pepsi's executives, ie people tend to consume exactly the amount purchased!!!!

"... If the advertising and promotions persuaded people to purchase more in a given week, people consumed more in a given week..."

Corporate Learning Network 2019

This resulted in Pepsi-Cola redesigning packages that made it easier to get more soft drinks into the home. This was so successful that the Coke Cola iconic bottle has nearly disappeared!!!

Similarly we need to keep away from the blame game, ie 'who and why did they do this to us'?. This needs to be reworded to 'what did we do wrong'?

"...One question leads to self-pity; the other to self-help. One disavows personal responsibility and moral agency; the other commands them..."

Corporate Learning Network 2019

In summary

"...Beyond getting the answers, the effective executive asked the right questions to get people to think rather just act, react or administer...... asking the right questions requires wisdom which is a result of experience, knowledge, and continuous learning..."

Corporate Learning Network 2019

Also it is important to have the required skill of building relationships with people who can help you see things in a different way - that is, from different perspectives.

. Narrow framing = treats each decision separately. It increases the emotional reaction to losses and decreases the willingness to take risks. Encourages a focus on short-term outcomes and this results in frequent changes of decisions and reduced performance

. Broad framing = treats decisions as part of a portfolio or group approach. It blunts the emotional reaction to losses and increases the willingness to take risks. Encourages a focus on long-term outcomes and usually results in better decisions and outcomes.

NB The pain of frequent small losses exceeds the pleasure of equally frequent small gains

. Emotionally loaded words quickly attract attention; with bad words, like crime, war, etc, attracting attention faster than do words like peace, love, etc. Even though there is no real threat, words can create a picture of an event. The mere reminder of a bad event is treated as threatening and can evoke an emotional reaction. For example, statements of opinion that strongly disagree with your own can be seen as a threat.

. Some examples on the importance of framing, ie words used

- The importance of words can be demonstrated by the way they are used to describe people who come to Australia in boats. There are 9 descriptions, eg

i) Boat people (non-descriptive term)

ii) Refugees (generates universal sympathy)

iii) Political refugees (polarises emotions)

iv) Asylum seekers (in focusmore sympathy than refugees)

v) Political asylum seekers (greater polarisation of the emotions)

vi) Illegal asylum seekers (universal lack of sympathy)

vii) Queue jumpers (lack of sympathy)

viii) Potential terrorists (universal concern)

ix) Terrorists (universal fear)

The words used can reveal your point of view, ie if you are against the boat people coming to Australia, you are more likely to use the descriptions from 6 to 9. On the other hand, if you are supportive of the boat people coming to Australia, you are more likely to use descriptions 1 to 5.

(source: Ken Parry, 2005)

- the results of a soccer match, eg "Italy won"/ "France lost". Do these statements have the same meaning? They can evoke markedly different emotional responses and can have different meanings

- lotteries - a bad outcome is more acceptable if it is framed as the cost of lottery ticket that did not win than if it is simply described as losing a gamble, ie losses evoke stronger negative feelings than costs

- fuel stations - charge different prices for cash or credit purchases, ie cash is cheaper. It is called a cash discount, not a credit surcharge. People will more readily forego a discount and pay a surcharge

- "...The two may be economically equivalent, but they are not emotionally equivalent..."

- Daniel Kahneman 2012

- mortality - 90% survival sounds encouraging while 10% mortality sounds frightening

- opting in and opting out clauses - it is the best indicator of whether people will donate organs or not. The opt-out has a significantly higher adoption rate than the opt-in situation

. Choices are not reality-bound. The tendency to approach or avoid are revoked by the words used, ie loss v. gain, keep v. lose, etc. Our preferences are frame-bound rather than reality-bound. Risk-averse and risk-seeking preferences are not reality-bound. Preferences between the same objective outcomes with different formulations.

. Framing effect = people are more likely to choose the sure thing in the keep frame and more likely to accept the gamble than the loss. Even professionals react the same way as non-professionals. Your moral feelings are attached to the frames, ie their description of reality rather than to reality itself.

. Broadening frames leads to more rational decisions; conversely, narrowing frames leads to less rational decisions

. Cost-loss discrepancy = something is framed as a choice between a sure loss and a risk of greater loss, eg, insurance; losses are more aversive than costs

. Dead-loss effect = an individual's subjective state can be improved by framing negative outcomes as costs rather than as losses, eg paying a sport's membership fee and then experiencing an injury that means playing the sport is painful, many people will continue to endure the pain and play the sport as they have paid the membership fee (the fee would be a dead loss if the subscriber stopped playing)

Prospect theory = human beings are best understood as being risk-adverse when making a decision that offers hope of gain but risk-seeking when making a decision that will lead to a certain loss.

Framing = how people react to a choice depending on whether it is presented to them as a risk or a gain.

The brain was not designed to calculate the probabilities in complex situations like flying an aeroplane. Thus people who fly aeroplanes are susceptible to sensory illusion, ie a pilot, without instruments, who flies into clouds as an average life expectancy of around 3 minutes.

People's minds cope with loss by drifting into fantasy places where loss never occurs

Areas of interest

- studying rules of regret

- understanding people's anticipation of the unpleasant emotion

- how people can do the events that have already happened

- understand states of frustrated hope, relief or regret (are they important aspects of the experience of consequences? It is suspected that there is a major bias against acknowledgement of the true impact of such experience)

"...it is expected of mature individuals that they should feel the pain or pleasure that is appropriate to the circumstances without undue contamination by unrealistic possibilities..."

Daniel Kahneman and is quoted by Michael Lewis 2016

 

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