Framing matters

Would you rather contribute to a charity with the goal of saving children's lives or to a charity that aims at preventing the deaths of children?  

Both charities' goals are identical, but many would prefer to contribute to the second charity rather to the first one. The first charity's goal is framed as making a gain while the second is framed as preventing a loss. Since people tend to focus on losses more than on gains, the second charity's cause feels more urgent.

What is healthier? A burger which is 75% lean or one that is 25% fat? Again, both burgers are identical but people rank the 75% lean burger as far better.

This phenomenon, in which decisions can be strongly affected by the description of a situation is called framing. As with charities, framing can have a strong effect on individual actions in many social situations. For example, a 'community meeting' may reach more amicable results than a 'stakeholder meeting'. A few days ago, I was strongly reminded of that in a class experiment I conducted in my Game Theory course.

In this simple experiment I let students taking the course play a dictator game. In this game students are put in groups of two, where only one of them (the 'dictator') decides how to split a hypothetical sum of 10 Euros. This experiment mirrors some aspects of real life decisions facing people, such as charitable giving or helping a stranger. I randomly presented students with two versions of this game -- one named 'the dictator game' and the other 'the sharing game'.

The graph above presents the fraction of students choosing to keep different amounts of money. The black line shows the distribution of students' choice in the dictator version and the blue line the distribution of students' choice in the sharing game. The difference in the students' choice of how much of the sum to keep is clearly visible (it is also statistically significant). In the dictator version almost all students demonstrated a selfish (or rational) behavior, deciding to take the full sum of 10 Euros for themselves. In the sharing game on the other hand, almost half the students decided to share the sum equally with the other student in their group. Even being familiar with the framing bias, I was surprised to find such a strong effect of this simple change in the game's description.

Since framing can have large effects even in the simplest of environments it shouldn't be a surprise that framing is used all around us -- supermarkets place their low priced 'own brand' next to the highest priced premium brand, internet providers offer a special discounts on their (much pricier) high-speed services, and pollsters adjust their questions to reach a desired answer.

Sidenote: While framing is a well established phenomenon, the results of the class experiment should be taken with a few grains of salt. Dreber et al. find no effect of social framing on behavior in a dictator game, using a much larger number of participants than in my class experiment.  

How the Republicans and Netanyahu are helping Obama’s Iran deal

The Book of Genesis describes God's decision to punish Sodom and Gomorrah for their wickedness. God tells Abraham about his intention, turning Abraham into an advocate for the two cities. In his new role, Abraham bargains with God over the threshold of evidence required to find Sodom and Gomorrah guilty. Step by step, Abraham succeeds in decreasing the number of righteous people required to demonstrate there is a reasonable doubt that the cities are guilty of wickedness. The negotiation ends with God's promise that the cities will be spared from destruction if ten or more righteous people are found.

Negotiation and bargaining are ingrained in human nature: children haggle about bedtime, shoopers bargain for better deals in the market, and diplomats negotiate over treaties. Common to all these activities are conflicting goals and a desire to reach a beneficial agreement. Of course, each party to a negotiation wishes to achieve the best possible outcome for itself. One way to do so is by announcing that no matter what, the party will not accept any offer lower than a certain threshold. This strategy can be problematic though -- it is unlikely the announcement will be taken seriously because it isn't very credible.

Imagine a game with 10 Euros on the table and two participants, Hassan and John. Hassan decides how much of the 10 Euros to take for himself and how much to leave for John. John can accept Hassan's allocation and take his share, or reject it and ensure that both he and Hassan receive nothing. This game is called an Ultimatum Game, a common setting used by Economists and Psychologists to study individual behavior. It is also a simple form of negotiation.

How much money should Hassan leave for John? If Hassan does not care for John, he should offer him the minimum amount John would accept. Hassan's challenge is to learn what this minimum is. John would like Hassan to think his minimum sum is high because it will lead to a higher offer from Hassan. As a result, any announcement from John about his own acceptable minimum sum is not taken too seriously by Hassan. This is referred to in Game Theory as a 'non-credible threat' -- John's announcement, or threat, not to accept low offers is not credible. If John could make his threat credible then he would guarantee a high offer from Hassan.

One way to do so is for John to become known for irrationality, leading Hassan to believe he will reject low shares of the 10 Euros. Another way to make a threat credible is to have an external, observable, constraint that limits his minimum acceptable sum imposed on himself. In many respects, a confrontational Republican congress and Benjamin Netanyahu's rhetoric are such a constraint on John Kerry and Barack Obama. In negotiating with Iran, Kerry can credibly threat that a weak agreement, with limited restrictions on Iran's nuclear capabilities, will not be politically viable for the Obama administration. Thus, the existence of 'credible minimum' grants the US negotiators a stronger hand than they would otherwise had.

Ironically, it is possible that the detractors of the Iran deal will assist the eventual agreement to be palatable enough for the American public opinion to support it.