Chapter Summary Of Framing And The Reversal Of Preferences

Bazerman’s Chapter Five, Framing and the Reversal of Preferences, was lofty, complicated, and one where I needed to reread the concepts many times to fully understand what was being put forth. The topic was framing, which uses subtleties of language to affect the choice a person makes for an optimal outcome of a situation. The language subtleties include the concept of expected-value decisions, declining marginal utility of gains, expected utility, and risk preferences. Chapter Five begins with a series of word problems where the reader has to choose the outcome from mutually exclusive choices. The chapter is preparing the manager for optimal results when making important decisions and how the “framing of a problem affects the decision-making process.” (p. 84) The book examines how people make choices depending on how a problem is worded or framed. Covered

Conversely, when the problem is objectively the same, but framed negatively, or by loss, most people will reverse their answer. This is called a reversal of preferences. Surveys show that these answers too, can be predicted. The chapter presents problems framed one way and then presents the same problems framed differently. The authors showed how framing a question can change the focus or the valuation point and can influence a choice. It was tested and the results were predictive. A complete reversal of preferences could be had by the way a problem was framed. Bazerman states, “[t]he sum of the undesirable choices dominates the sum of the desirable choices! Thus, the framing of the combined problem in two parts results in a reversal of preferences.” (p. 86). The text goes on to give exceptions to the expected-value decision by adding subtleties to the problems that change the focus of the outcome and make a choice much more difficult to