Organizational Behavior (Stephen Robbins)

Framing
Kahneman and Tversky discovered that even when people are trying to be coldly logi-
cal, they give radically different answers to the same question if it is posed in different
ways.^21 For instance, consider choices A and B in Scenario 1 in Exhibit 9-2. Most people
come to an opposite conclusion for A and B, even though the problems are identical. The
only difference is that the first states the problem in terms of lives saved, while the sec-
ond states it in terms of lives lost.
This judgment error is called framing, and it refers to how the selective use of per-
spective alters the way we might view a situation in formulating a decision.

Statistical Regression to the Mean
Sometimes people make judgments while ignoring statistical regression to the mean,
the statistical observation that a very good performance is often followed by a lesser
performance, while a lesser performance is often followed by a very good performance;
the result is average performance over time. This heuristic may be of particular interest
to those trying to decide whether rewards or punishments work better with employ-
ees, colleagues, children, and even friends. Although many studies indicate that rewards
are a more effective teaching tool than punishment, Kahneman was once faced with a
student who begged to differ on this point. “I’ve often praised people warmly for beau-
tifully executed manoeuvres, and the next time they almost always do worse. And I’ve
screamed at people for badly executed manoeuvres, and by and large the next time they
improve.” Regression to the mean helps us understand that each person has an average
performance level, so the highs and the lows balance out. Performance improvements
happen over the long term. Thus, in this example, it would be helpful to realize that
screaming is less likely to result in long-term improvements in behaviour and also tends
to damage the relationship between people.

Availability Heuristic
The availability heuristicis the tendency for people to base their judgments on infor-
mation that is readily available to them rather than complete data. Events that evoke emo-
tions, that are particularly vivid, or that have occurred more recently tend to be more
available in our memories. As a result, we tend to overestimate unlikely events such as

Chapter 9Decision Making, Creativity, and Ethics 299

EXHIBIT 9-2 Examples of Decision Biases

Scenario 1 : Answer part A before reading part B.

A:Threatened by a superior enemy force, the general faces a dilemma. His intelligence officers say his soldiers will be

caught in an ambush in which 600 of them will die unless he leads them to safety by one of two available routes. If he

takes the first route, 200 soldiers will be saved. If he takes the second, there’s a one-third chance that 600 soldiers will be

saved and a two-thirds chance that none will be saved. Which route should he take?

B:The general again has to choose between two escape routes. But this time his aides tell him that if he takes the first,

400 soldiers will die. If he takes the second, there’s a one-third chance that no soldiers will die, and a two-thirds chance

that 600 soldiers will die. Which route should he take?

Scenario 2:

Linda is 31, single, outspoken, and very bright. She majored in philosophy in university. As a student, she was deeply con-

cerned with discrimination and other social issues and participated in antinuclear demonstrations. Which statement is

more likely?:

a.Linda is a bank teller.

b.Linda is a bank teller and active in the feminist movement.

Source: K. McKean, “Decisions, Decisions,” Discover,June 1985, pp. 22–31.

framing Error in judgment that

arises from the selective use of per-

spective (that is, the way that a set

of ideas, facts, or information is pre-

sented) that alters the way we view

a situation in formulating a decision.

statistical regression to the

mean The statistical observation

that an above-average performance

is often followed by a lesser per-

formance, while a below-average

performance is more likely followed

by a better performance; the result is

average performance over time.

availability heuristic The

tendency for people to base their

judgments on information that is

readily available to them rather than

complete data.