framing effect

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pages: 254 words: 72,929

The Age of the Infovore: Succeeding in the Information Economy by Tyler Cowen

Albert Einstein, Asperger Syndrome, business cycle, Cass Sunstein, cognitive bias, David Brooks, en.wikipedia.org, endowment effect, Flynn Effect, framing effect, Google Earth, impulse control, informal economy, Isaac Newton, loss aversion, Marshall McLuhan, Naomi Klein, neurotypical, new economy, Nicholas Carr, pattern recognition, phenotype, placebo effect, Richard Thaler, selection bias, Silicon Valley, social intelligence, the medium is the message, The Wealth of Nations by Adam Smith, theory of mind

The web is strengthening the aspects of your identity that are fact-based and easy to spell out in very direct language. Finally, framing effects are more important than ever before. Some experiences, and some goods and services, are more subject to framing effects than others. If someone shoots you in the heart with a bullet, framing effects probably don’t much matter. You’re going to die, and if you survive the immediate impact it’s going to be unpleasant, no matter what your attitude. If you give a hungry man food, he is going to enjoy it no matter how it is framed; Cicero wrote, “Hunger is the best sauce.” The more visceral the experience, the less likely it is that framing effects will make a big difference for your pain or enjoyment. This means that wealthy, secure societies offer greater scope for framing effects, and in particular they offer greater scope for beneficial framing effects. Competition gives you the chance to construct the whirlwind of influences that you most prefer.

When Rhapsody announced a total reorganization of its service in June 2008, it pointed in the direction of the iTunes/iPod experience. Behavioral economists sometimes write of human beings as subject to “framing effects,” meaning that the presentation of the alternatives influences our choices. For instance we often choose more conservatively if the very same opportunity is described to us as a gain of something rather than as a loss of something. Or the presence of a very-high-calorie item on a menu—which we don’t order—makes us feel less guilty about later getting dessert. Usually the presumption is that framing effects are to be avoided. To be sure, many framing effects are irrational but framing effects help put the guts into our lives. We spend time and energy framing things in the right way so that we can enjoy them more or learn more from them.

You can follow only your five dearest friends on Twitter or send text messages to only your immediate family. Facebook isn’t the only framing device out there and you can direct your attention elsewhere to offset any unwanted biases of Facebook. Framing effects are not just one-off influences but rather we choose them from a broad portfolio of options. We mix and match framing effects as we see fit, and so it is again a mistake to focus on the cognitive biases uncovered in stand-alone experiments under lab conditions. If there is any important bias in human affairs, it is again the überbias of choosing which framing effects to enjoy. When it comes to friendship, I’m not so worried that people will choose the framing effects that make all their close friends go away. Again, a networked world is very often an intimate world. I once met a guy who had so many “friending” services (it seemed he had as many services as some people have friends) that he constructed an entire web page to organize them.


pages: 339 words: 105,938

The Skeptical Economist: Revealing the Ethics Inside Economics by Jonathan Aldred

airport security, Berlin Wall, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, endogenous growth, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, greed is good, happiness index / gross national happiness, hedonic treadmill, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, longitudinal study, new economy, Pareto efficiency, pension reform, positional goods, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, spectrum auction, Thomas Bayes, trade liberalization, ultimatum game

For example, the options between which we choose are not as clear-cut or objective as economic theory implies. Essentially the same set of options can be perceived very differently, leading to completely different choices, due to framing effects, so-called because they concern the context or frame through which a person perceives a decision. A box of Razzle Dazzle can be perceived as expensive (if we remember that it cost less a month ago) or cheap (if the retailer displays it as being on ‘special offer’). You may feel confident that you are not fooled by such simple retailing ploys (you always ignore ‘special offer’ claims when assessing price) but framing effects are pervasive and not always so obvious. Framing effects: Two examples Merely because an option is framed as the default option - one that will be selected unless the chooser actively decides otherwise - it is much more likely to be ‘chosen', even when the decision is important.

We all know the danger of buying more food than intended when shopping on an empty stomach, a danger confirmed by psychological evidence.10 Similarly, catalogue shoppers ordering by telephone seem overly influenced by the current weather: warm clothes ordered on cold days are more likely to be returned later.11 And many people join gyms and health clubs which they subsequently rarely use, because at the time of joining they focus on the health benefits, rather than how they will feel in the future when visiting the gym.12 A form of framing effect also distorts our predictions of future satisfaction. Suppose you are trying to decide between two equally expensive pairs of stereo speakers. In the audio shop, you will probably put great weight on which sounds better, and purchase on that basis, even though the differences are likely to be small. Unfortunately, at home you realize that you care more about the speakers’ appearance, because the marginally superior sound quality is undetectable in isolation.13 The context of choice in the shop leads us to put too much weight on an attribute which we later find less important.

Suppose I had a choice: should I minimize the pain experienced during the colonoscopy procedure itself, or should I choose the option which, although it involves additional discomfort at the time, will make me feel happier about the whole experience shortly afterwards, and less fearful of follow-up operations? Self-interest is also far from clear in the theatre example discussed earlier. Economic theory prescribes that we should reach the same decision about whether to see the show, regardless of whether we discover outside that we have lost $40 cash or a $40 ticket. We are supposed to choose solely on the basis of the material benefits and costs involved, and not be influenced by framing effects, the context of the choice. Does our self-interest demand this type of ‘consistency’? Context matters. Even if the net financial impacts in two situations are identical, most of us distinguish them. Losing $40 cash is seen as one of life’s minor misfortunes that inevitably befall us, with no implications for whether we see the show. But having to buy a replacement for a lost $40 ticket means that it will effectively cost $80 to go in, a price that may deter us.


pages: 190 words: 53,409

Success and Luck: Good Fortune and the Myth of Meritocracy by Robert H. Frank

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Amazon Mechanical Turk, American Society of Civil Engineers: Report Card, attribution theory, availability heuristic, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, carried interest, Daniel Kahneman / Amos Tversky, David Brooks, deliberate practice, en.wikipedia.org, endowment effect, experimental subject, framing effect, full employment, hindsight bias, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, invisible hand, labor-force participation, lake wobegon effect, loss aversion, minimum wage unemployment, Network effects, Paul Samuelson, Report Card for America’s Infrastructure, Richard Thaler, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Rory Sutherland, selection bias, side project, sovereign wealth fund, Steve Jobs, The Wealth of Nations by Adam Smith, Tim Cook: Apple, ultimatum game, Vincenzo Peruggia: Mona Lisa, winner-take-all economy

EACH PERSON’S SPENDING DEPENDS IN PART ON WHAT OTHERS SPEND. Standard economic models assume that each person’s spending is completely independent of what others spend. But if framing effects matter, that can’t be right. People spend more when their friends and neighbors spend more. This isn’t some fantastic new discovery. It’s a dynamic we’ve known about since the dawn of time. Many have called it “keeping up with the Joneses.” But I’ve never liked that expression, because it summons images of insecure people trying to appear wealthier than they are. Peer influences would in fact be just as strong in a world completely free of jealousy and envy. Rising inequality has made framing effects stronger. The median new house in the United States is now 50 percent larger than it was in 1980, even though the median income has grown only slightly in real terms.

Few behavioral scientists would deny that our surroundings shape what we feel we need. But the profound implications of that simple fact have largely escaped the attention of economists and have not yet been fully grasped by behavioral scientists in other disciplines. If those implications are any clearer to me, it’s only because having lived for two years in one of the world’s poorest countries led me to focus so intently on these “framing effects” during the ensuing decades. Sticking with my write-what-you-know theme, the most striking lesson of my experience in Nepal was that despite the dramatically lower material living standards there, my experience of day-to-day life was astonishingly similar to what I’d been used to. When I write, for example, that the same two-room house with no plumbing or electricity that seemed completely satisfactory to me there would seem shamefully inadequate in any American middle-class neighborhood, I’m merely writing what I know.

Similarly, the fact that the average American wedding now costs more than $30,000,10 almost three times as much as in 1980, doesn’t appear to have made today’s marrying couples any happier. According to one recent study, however, it appears to have made them more likely to divorce.11 The economists Andrew Francis and Hugo Mialon estimated, for example, that couples who spent more than $20,000 on their weddings were more than 12 percent more likely to divorce during any given year than were those who spent between $5,000 and $10,000. Framing effects have spawned waste in a second way by creating a powerful bias in favor of private consumption over public investment. The basic idea is captured in a simple example involving cars and highways. Everyone agrees that cars would be of little use without roads and that roads would be of little use without cars. What’s harder is to identify the best mix of the two categories. It’s fairly easy, however, to see that the current mix in the United States is far from optimal, at least from the perspective of wealthy drivers.


pages: 654 words: 191,864

Thinking, Fast and Slow by Daniel Kahneman

Albert Einstein, Atul Gawande, availability heuristic, Bayesian statistics, Black Swan, Cass Sunstein, Checklist Manifesto, choice architecture, cognitive bias, complexity theory, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, delayed gratification, demand response, endowment effect, experimental economics, experimental subject, Exxon Valdez, feminist movement, framing effect, hedonic treadmill, hindsight bias, index card, information asymmetry, job satisfaction, John von Neumann, Kenneth Arrow, libertarian paternalism, loss aversion, medical residency, mental accounting, meta analysis, meta-analysis, nudge unit, pattern recognition, Paul Samuelson, pre–internet, price anchoring, quantitative trading / quantitative finance, random walk, Richard Thaler, risk tolerance, Robert Metcalfe, Ronald Reagan, Shai Danziger, Supply of New York City Cabdrivers, The Chicago School, The Wisdom of Crowds, Thomas Bayes, transaction costs, union organizing, Walter Mischel, Yom Kippur War

An article published in 2003 noted that the rate of organ donation was close to 100% in Austria but only 12% in Germany, 86% in Sweden but only 4% in Denmark. These enormous differences are a framing effect, which is caused by the format of the critical question. The high-donation countries have an opt out form, where individuals who wish not to donate must check an appropriate box. Unless they take this simple action, they are considered willing donors. The low-contribution countries have an opt-in form: you must check a box to become a donor. That is all. The best single predictor of whether or not people will donate their organs is the designation of the default option that will be adopted without having to check a box. Unlike other framing effects that have been traced to features of System 1, the organ donation effect is best explained by the laziness of System 2.

The focus of part 4 is a conversation with the discipline of economics on the nature of decision making and on the assumption that economic agents are rational. This section of the book provides a current view, informed by the two-system model, of the key concepts of prospect theory, the model of choice that Amos and I published in 1979. Subsequent chapters address several ways human choices deviate from the rules of rationality. I deal with the unfortunate tendency to treat problems in isolation, and with framing effects, where decisions are shaped by inconsequential features of choice problems. These observations, which are readily explained by the features of System 1, present a deep challenge to the rationality assumption favored in standard economics. Part 5 describes recent research that has introduced a distinction between two selves, the experiencing self and the remembering self, which do not have the same interests.

I return to the virtues of educating gossip and to what organizations might do to improve the quality of judgments and decisions that are made on their behalf. Two articles I wrote with Amos are reproduced as appendixes to the book. The first is the review of judgment under uncertainty that I described earlier. The second, published in 1984, summarizes prospect theory as well as our studies of framing effects. The articles present the contributions that were cited by the Nobel committee—and you may be surprised by how simple they are. Reading them will give you a sense of how much we knew a long time ago, and also of how much we have learned in recent decades. Part 1 Two Systems The Characters of the Story To observe your mind in automatic mode, glance at the image below. Figure 1 Your experience as you look at the woman’s face seamlessly combines what we normally call seeing and intuitive thinking.


pages: 453 words: 111,010

Licence to be Bad by Jonathan Aldred

"Robert Solow", Affordable Care Act / Obamacare, Albert Einstein, availability heuristic, Ayatollah Khomeini, Benoit Mandelbrot, Berlin Wall, Black Swan, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, clean water, cognitive dissonance, corporate governance, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, Donald Trump, Douglas Engelbart, Douglas Engelbart, Edward Snowden, Fall of the Berlin Wall, falling living standards, feminist movement, framing effect, Frederick Winslow Taylor, From Mathematics to the Technologies of Life and Death, full employment, George Akerlof, glass ceiling, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jeff Bezos, John Nash: game theory, John von Neumann, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, meta analysis, meta-analysis, Mont Pelerin Society, mutually assured destruction, Myron Scholes, Nash equilibrium, Norbert Wiener, nudge unit, obamacare, offshore financial centre, Pareto efficiency, Paul Samuelson, plutocrats, Plutocrats, positional goods, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Skype, Social Responsibility of Business Is to Increase Its Profits, spectrum auction, The Nature of the Firm, The Wealth of Nations by Adam Smith, transaction costs, trickle-down economics, Vilfredo Pareto, wealth creators, zero-sum game

22 Kahneman and Tversky discovered that a large majority favour A when asked the first question, while a large majority favour D in answer to the second – even though the two questions are essentially the same. Policy A has the same outcome as policy C, and B has the same outcome as D. The exact wording or framing of the alternatives alters people’s choices; these framing effects turn out to be ubiquitous in a wide range of decision contexts. For psychologists, this was not surprising: of course our decision-making is affected by how the alternatives are described. But it was shocking news for orthodox economists. With their careful, meticulous experiments, Kahneman and Tversky forced economists to accept the reality of framing effects. And they had an equally powerful impact on how most economists thought about incentives. First, Kahneman and Tversky made economists much more accepting of the possibility that incentives can be counterproductive.

Once there was too much robust evidence of crowding out to be able to ignore it, the only remaining possibility was to label this kind of behaviour ‘irrational’: a feeble response, but a correct one, if ‘rational’ is defined as what homo economicus would do. Kahneman and Tversky’s crucial contribution was to develop an explanation for what economists had previously called irrationality, in effect an entire theory of irrationality. This rescued crowding out from being an embarrassing anomaly: now it was just one among many types of ‘irrational’ human behaviour. Second, some economists saw in Kahneman and Tversky’s framing effects an explanation of how incentives sometimes backfire and sometimes don’t. Incentives which are identical as far as economic theory is concerned – the same monetary value, and so on – can produce different results, depending on how they are described or framed. Third, accepting the reality of counterproductive incentives suggested that another approach to policy-making was needed. But as the new behavioural economics began to filter through to policy-making circles, something strange happened.

Unlike the pregnant women, blood donors seem unlikely to tell their peers that they are motivated by money, even if that’s the truth. Behavioural economists and other incentive designers need to be able to distinguish the pregnant women from the blood donors, so moral complexity and ambiguity cannot be ignored. That means going beyond labelling different descriptions of different situations as mere ‘framing effects’ and going beyond welfare maximization as the definition of what people want and what is best for society. We can get another perspective on the morality of incentives by contrasting them with rewards and punishments. There is a big difference. We don’t say that athletes are ‘incentivized’ to win Olympic medals, because medals are rewards for excellence, not incentives. The difference remains even if the rewards and punishments are financial.


Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

Airbnb, Albert Einstein, algorithmic trading, barriers to entry, cloud computing, collaborative economy, commoditize, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, demand response, disintermediation, disruptive innovation, double helix, Downton Abbey, Erik Brynjolfsson, experimental economics, Firefox, framing effect, Google Chrome, index arbitrage, information asymmetry, interest rate derivative, Internet of things, invisible hand, Jean Tirole, John Markoff, Joseph Schumpeter, Kenneth Arrow, light touch regulation, linked data, loss aversion, Lyft, Mark Zuckerberg, market clearing, market friction, Milgram experiment, multi-sided market, natural language processing, Network effects, new economy, offshore financial centre, pattern recognition, prediction markets, price discrimination, price stability, profit maximization, profit motive, race to the bottom, rent-seeking, Richard Thaler, ride hailing / ride sharing, road to serfdom, Robert Bork, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, supply-chain management, telemarketer, The Chicago School, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, Travis Kalanick, turn-by-turn navigation, two-sided market, Uber and Lyft, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, women in the workforce, yield management

Coupon site Rather-be-shopping.com, for example, “found 17 well-known retailers (including Bed, Bath & Beyond, Macy’s, and Williams-Sonoma) that offered coupons (ranging from 20% off to free shipping) to customers who left their carts.”49 Minimize the Perceived Unfairness through Framing Effects Many consumers, as the next chapter discusses, feel cheated by price discrimination. They are deprived of a market price. To address this, firms can rely on framing effects when price discriminating. The behavioral economics literature suggests that “framing effects” (how the issue is worded or framed) do matter.50 Here the price discrimination is framed not as consumers paying more, but rather as some getting a discount. Credit cards are one example. Merchants often tell consumers of a discount if they pay with cash. Merchants never tell consumers they must pay more if they use a credit card.

But self-learning algorithms and God View could make tacit collusion among more competitors likelier. The stability needed for tacit collusion is enhanced by the fact that computer algorithms, while not trusting, are unlikely to exhibit other human biases. Human biases can always be reflected in the programming code, but if some biases are minimized (such as loss aversion, the sunk cost fallacy, and framing effects), the algorithm acts consistently on more deliberative analysis, rather than intuition.14 Unlike humans, the computer does not fear detection and possible financial penalties or incarceration; nor does it respond in anger. The computer can quantify the payoffs that are likely achievable through cooperation in future games, and opt for forbearance rather than punishing small deviations. It can also be more efficient in analyzing payoffs, since “solution space exploration is concentrated on ‘promising’ areas, and is not pre-imposed by the modeller.”15 With the industry-wide use of computer algorithms, we may witness conscious parallelism in markets with many more players, where collusion previously would have been unstable.

See also Comparison intermediaries; Price discrimination Behavioral discrimination, “almost perfect,” 30, 101–116, 289n1; biases used to increase consumer demand, 105–113; personal data and informational asymmetries, 112–115, 294n62; self-learning algorithms and, 101–103; targeting and categorization and, 103–105 Behavioral discrimination, economic and social perspectives on, 117–130, 234; actual discrimination and, 124–127, 129; complexity of, 119–121; economic incentives and, 228–229; enforcement issues, 127–128, 219, 221, 300n47, 301nn48,50, 302nn55,56; fairness and equality lacking with, 123–124, 129; neoclassical economists and price discrimination, 117–119, 295nn4–9, 297n12; personal assistants and, 191, 195–196; positive feedback loop and private data, 236–238; privacy concerns and, 129–130, 227; social acceptance and, 121–122, 129, 130, 303n60; wealth inequality and, 241 Behavioral economics, 97–98, 105 Behavioral experiments, intermediaries and, 42–44 Benchmark interest rates/exchange rates, Messenger collusion scenario and, 40, 269nn7,9 Biases, exploiting to increase consumer demand, 105–113; decoy products, 106–107; drip pricing, 109–110; framing effects, 111–113; imperfect willpower, 110–111; increased complexity, 108–109; price steering, 107–108 Big Data and Big Analytics, competitive environment changes and, 11–21; Amazon’s business practices and, 12–15, 255n8, 257n34; Big Analytics defi ned, 15; Big Data’s four Vs, 15, 20; cloud computing and Internet of Things, 18; emerging trends and industry transformations, 19–21; as mutually reinforcing, 16, 259n47; online marketplace growth and, 15–18 BlackBerry, 149 Black Friday shopping, 19–20 Bloomberg, 155 BNP Paribas, 269n9 Boise Cascade Corp. v.


Infotopia: How Many Minds Produce Knowledge by Cass R. Sunstein

affirmative action, Andrei Shleifer, availability heuristic, Build a better mousetrap, c2.com, Cass Sunstein, cognitive bias, cuban missile crisis, Daniel Kahneman / Amos Tversky, Edward Glaeser, en.wikipedia.org, feminist movement, framing effect, hindsight bias, information asymmetry, Isaac Newton, Jean Tirole, jimmy wales, market bubble, market design, minimum wage unemployment, prediction markets, profit motive, rent control, Richard Stallman, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, slashdot, stem cell, The Wisdom of Crowds, winner-take-all economy

Use of the availability heuristic is not irrational, but it can easily lead to serious errors of fact. After the 2005 disaster produced by Hurricane Katrina in the United States, it was predictable that significant steps would be taken to prepare for hurricanes—and also predictable that before that disaster, such steps would be quite inadequate. 76 / Infotopia Most people are also strikingly vulnerable to framing effects, making different decisions depending on the wording of the problem. Consider the question whether to undergo a risky medical procedure. When people are told, “Of those who have this procedure, 90 percent are alive after five years,” they are far more likely to agree to the procedure than when they are told, “Of those who have this procedure, 10 percent are dead after five years.”5 People also follow the representativeness heuristic, in accordance with which our judgments of probability are influenced by assessments of resemblance: the extent to which A “looks like” B.6 If A does indeed look like B, we are more likely to think that A causes B, or vice versa.

by placing him at the scene of the crime; perhaps the jury’s bias is a product of the unappealing physical appearance of the defendant (not a famous movie star). If so, the many minds on the jury are likely to amplify rather than to correct those biases.9 Deliberating groups have also been found to amplify, rather than to attenuate, reliance on the representativeness heuristic.10 Such groups fall prey to even larger framing effects than individuals, so that when the same situation is described in different terms, groups are especially likely to be affected by the redescriptions.11 Groups show more overconfidence than group members;12 78 / Infotopia they are even more affected by the biasing effect of bad arguments from lawyers.13 In an especially revealing finding, groups have been found to make more, rather than fewer, conjunction errors (believing that A and B are more likely to be true than A alone) than individuals when individual error rates are high—though fewer when individual error rates are low.14 Groups do demonstrate a decreased level of reliance on the availability heuristic, but the decrease is slight, even when use of that heuristic leads to clear errors.15 Here’s a disturbing finding, one with great relevance to group behavior in both politics and business: Groups are more likely than individuals to escalate their commitment to a course of action that is failing—and all the more so if members identify strongly with the groups of which they are a part.16 There is a clue here about why companies, states, and even nations often continue with projects and plans that are clearly going awry.

See Amos Tversky and Daniel Kahneman, “Availability: A Heuristic for Judging Frequency and Probability,” Cognitive Psychology 5 (1973): 208 (discussing availability heuristic). 3. Paul Slovic, The Perception of Risk (London: Earthscan Publications, 2000), 37–48. Notes to Pages 70–76 / 241 4. Ibid., 40. 5. See Donald A. Redelmeier et al., “Understanding Patients’ Decisions: Cognitive and Emotional Perspectives,” Journal of the American Medical Association 270 (1993): 73 (discussing framing effects in medical context). 6. Amos Tversky and Daniel Kahneman, “Extensional versus Intuitive Reasoning: The Conjunction Fallacy in Probability Judgment,” in Gilovich et al., Heuristics and Biases, 19, 22–25 (discussing representativeness). 7. See Amos Tversky and Daniel Kahneman, “Judgment under Uncertainty: Heuristics and Biases,” in Judgment under Uncertainty: Heuristics and Biases, ed. Daniel Kahneman, Paul Slovic, and Amos Tversky (Cambridge, UK: Cambridge University Press, 1982), 11–12; Barbara Mellers et al., “Do Frequency Representations Eliminate Conjunction Effects?


pages: 417 words: 103,458

The Intelligence Trap: Revolutionise Your Thinking and Make Wiser Decisions by David Robson

active measures, Affordable Care Act / Obamacare, Albert Einstein, Alfred Russel Wallace, Atul Gawande, availability heuristic, cognitive bias, corporate governance, correlation coefficient, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, deliberate practice, dematerialisation, Donald Trump, Flynn Effect, framing effect, fundamental attribution error, illegal immigration, Isaac Newton, job satisfaction, knowledge economy, lone genius, meta analysis, meta-analysis, Nelson Mandela, obamacare, pattern recognition, price anchoring, Richard Feynman, risk tolerance, Silicon Valley, social intelligence, Steve Jobs, the scientific method, theory of mind, traveling salesman, ultimatum game, Y2K, Yom Kippur War

The sunk cost bias also showed almost no relationship to SAT scores in another study.13 Gui Xue and colleagues at Beijing Normal University, meanwhile, have followed Stanovich’s lead, finding that the gambler’s fallacy is actually a little more common among the more academically successful participants in his sample.14 That’s worth remembering: when playing roulette, don’t think you are smarter than the wheel. Even trained philosophers are vulnerable. Participants with PhDs in philosophy are just as likely to suffer from framing effects, for example, as everyone else – despite the fact that they should have been schooled in logical reasoning.15 You might at least expect that more intelligent people could learn to recognise these flaws. In reality, most people assume that they are less vulnerable than other people, and this is equally true of the ‘smarter’ participants. Indeed, in one set of experiments studying some of the classic cognitive biases, Stanovich found that people with higher SAT scores actually had a slightly larger ‘bias blind spot’ than people who were less academically gifted.16 ‘Adults with more cognitive ability are aware of their intellectual status and expect to outperform others on most cognitive tasks,’ Stanovich told me.

They keep on ruminating about the time they would lose, and so they try in vain to make the best of it – even though the scenario makes it pretty clear that they’ll have to spend the vacation in discomfort as a result. Bruine de Bruin, however, has found that this is not true of the people who can think more reflectively about their feelings in the ways that Feldman Barrett and others have studied.22 A Romanian study has found similar benefits with the framing effect. In games of chance, for instance, people are more likely to choose options when they are presented as a gain (i.e. 40 per cent chance of winning) compared with when they are presented as a loss (60 per cent chance of losing) – even when they mean exactly the same thing. But people with more sophisticated emotion regulation are resistant to these labelling effects and take a more rational view of the probabilities as a result.23 Being able to reappraise our emotions has also been shown to protect us against motivated reasoning in highly charged political discussions, determining a group of Israeli students’ capacity to consider the Palestinian viewpoint during a period of heightened tension.24 It should come as little surprise, then, that an emotional self-awareness should be seen as a prerequisite for the intellectually humble, open-minded thinking that we studied in the last chapter.

Linguists and writers have long known that our emotional experience of a second language will be very different from that of our mother tongue; Vladimir Nabokov, for instance, claimed to feel that his English was ‘a stiffish, artificial thing’ compared to his native Russian, despite becoming one of the language’s most proficient stylists: it simply didn’t have the same deep resonance for him.39 And this is reflected in our somatic markers, like the sweat response: when we hear messages in another language, the emotional content is less likely to move the body. Although that may be a frustration for writers such as Nabokov, Boaz Keysar at the University of Chicago’s Center for Practical Wisdom has shown that it may also offer us another way to control our emotions. The first experiment, published in 2012, examined the framing effect, using English speakers studying Japanese and French, and Korean speakers learning English. In their native languages, the participants were all influenced by whether the scenarios were presented as ‘gains’ or ‘losses’. But this effect disappeared when they used their second language. Now, they were less easily swayed by the wording and more rational as a result.40 The ‘foreign language effect’ has since been replicated many times in many other countries, including Israel and Spain, and with many other cognitive biases, including the ‘hot hand illusion’ – the belief, in sport or gambling, that success at one random event means we are more likely to have similar luck in the future.41 In each case, people were more rational when they were asked to reason in their second language, compared with their first.


pages: 168 words: 46,194

Why Nudge?: The Politics of Libertarian Paternalism by Cass R. Sunstein

Affordable Care Act / Obamacare, Andrei Shleifer, availability heuristic, Cass Sunstein, choice architecture, clean water, Daniel Kahneman / Amos Tversky, Edward Glaeser, endowment effect, energy security, framing effect, invisible hand, late fees, libertarian paternalism, loss aversion, nudge unit, randomized controlled trial, Richard Thaler

If people face a five-cent tax for using a plastic bag (a loss), they are much more likely to be affected than if they are given a five-cent bonus (a gain) for bringing their own bag.8 In response to questions, people persistently show both framing effects and loss aversion. (There is a nice lesson here for policymakers. If you want to have an impact, choose effective frames and enlist loss aversion. Is it paternalistic for policymakers to heed that lesson? Before you answer “yes,” note that some kind of framing is inevitable.) Now assume that people are answering those same questions in a foreign language—that is, a language that they speak, but in which they are not entirely comfortable. Here is the key finding: It turns out that they do not show either framing effects or loss aversion.9 Asked to resolve problems in a language that is not their own, people are less likely to depart from standard accounts of rationality.


pages: 187 words: 62,861

The Penguin and the Leviathan: How Cooperation Triumphs Over Self-Interest by Yochai Benkler

business process, California gold rush, citizen journalism, Daniel Kahneman / Amos Tversky, East Village, Everything should be made as simple as possible, experimental economics, experimental subject, framing effect, informal economy, invisible hand, jimmy wales, job satisfaction, Joseph Schumpeter, Kenneth Arrow, knowledge economy, laissez-faire capitalism, loss aversion, Murray Gell-Mann, Nicholas Carr, peer-to-peer, prediction markets, Richard Stallman, Scientific racism, Silicon Valley, Steven Pinker, telemarketer, Toyota Production System, twin studies, ultimatum game, Washington Consensus, zero-sum game, Zipcar

Anytime we make a decision to act, we have to first interpret the situation we’re in. Even economists have grudgingly admitted this; behavioral economics describes it as the framing effect. Amos Tversky and Daniel Kahneman, the fathers of behavioral economics, explain that people will make different decisions depending on how a situation is presented. For example, when making a bet, people will risk different amounts depending on whether the bet is described as risking a loss or aiming for a gain (behavioral economists have found that people display what is often called “loss aversion”: they will reject bets framed as potential losses, but accept that same bet when it is framed as potential gains). Countless experiments have demonstrated equally powerful framing effects in a wide range of contexts. While “framing” is popularly known today through these kinds of “irrationalities,” the situation and its impact on what we want and what we can or should do is a long-standing component of social psychology.


pages: 247 words: 62,845

VoIP Telephony with Asterisk by Unknown

call centre, Debian, framing effect, packet switching, telemarketer

Signals are sent with a"Robbed Bit" bit:8 of each channel's time slot is "robbed" to indicate a signaling state in the 6th and 12th frames. Effective throughput for the A signaling bit (Frame  6) is 666.66 BPS. Effective throughput for the B signaling bit (Frame 12) is the same (666.66 BPS). An Extended Superframe consists of twenty-four 193-bit frames. There are three types of framing bits; Frame Pattern Sync (FPS), Datalink (DL), and CyclicRedundancy Check (CRC) bits. Of the 8 kbs framing bit bandwidth 4 kbs is allocated to the Datalink, 2 kbs is allocated to the CRC-6 characte and 2 kbs is used for synchronization purpose ESF (Extended Superframe Signaling) uses a "Robbed Bit" Each channel's timeslot is "robbed" to create a signaling in the 6th, 12th, 18th, and 24th frames. Effective throughput for the A signaling bit (Frame 6) is 333.33 BPS. Effective throughput for the B, C and D bits is the same (333.33 BPS) Using T Carrier Channels for Telephone Calls After your T1 provider drops the T1 into your premises, they may then hand you a CSU/DSU or a router.


pages: 310 words: 82,592

Never Split the Difference: Negotiating as if Your Life Depended on It by Chris Voss, Tahl Raz

banking crisis, Black Swan, clean water, cognitive bias, Daniel Kahneman / Amos Tversky, Donald Trump, framing effect, friendly fire, iterative process, loss aversion, market fundamentalism, price anchoring, telemarketer, ultimatum game, uranium enrichment

This mentality baffled Kahneman, who from years in psychology knew that, in his words, “[I]t is self-evident that people are neither fully rational nor completely selfish, and that their tastes are anything but stable.” Through decades of research with Tversky, Kahneman proved that humans all suffer from Cognitive Bias, that is, unconscious—and irrational—brain processes that literally distort the way we see the world. Kahneman and Tversky discovered more than 150 of them. There’s the Framing Effect, which demonstrates that people respond differently to the same choice depending on how it is framed (people place greater value on moving from 90 percent to 100 percent—high probability to certainty—than from 45 percent to 55 percent, even though they’re both ten percentage points). Prospect Theory explains why we take unwarranted risks in the face of uncertain losses. And the most famous is Loss Aversion, which shows how people are statistically more likely to act to avert a loss than to achieve an equal gain.

Martin Parish, Louisiana, 162–63 Rule of Three and, 177–78 fairness, 20, 139 compromise as a bad deal, 115–16, 139 contract for Robin Williams in Aladdin and, 123 error in using, 183 Iranian sanctions and, 123–24 NFL lockout and, 125 Ultimatum Game, 120–23 Voss’s use of, 125–26 when and how to use in negotiation, 124–26 why it’s powerful, 122–24 falsehoods and liars, 172, 173, 176 number of words used, 178 Pinocchio effect, 178 Rule of Three and, 177–78, 186 use of pronouns, 178 fear amygdala and, 55, 61, 62, 243 labeling and calming, 61, 63, 64, 67, 73 of negotiating, 242 Federal Bureau of Investigation (FBI) Ackerman system, 21 “country clearance,” 58 Crisis Negotiation Teams, 49–51, 76–77, 86–87 crisis negotiation techniques, 4–5, 13–16, 141, 149, 165, 166, 167, 170, 174 Crisis Negotiation Unit (CNU), 96–97, 170 Critical Incident Response Group (CIRG), 14 Giffe hijacking hostages, mishandling of, 9–10 Hostage Rescue Team (HRT), 96 Joint Terrorism Task Force (JTTF), 24, 76, 77–78, 98 kidnapping negotiations, 141 number of agents, 1 Quantico, 96, 164, 173, 216 Ruby Ridge, Waco, and negotiation approach, 13–14 Supervisory Special Agent (SSA), 96 SWAT teams, 49, 76 Voss as a SSA with the CNU, 96 Voss as international kidnapping negotiator, 1, 98, 164 Voss begins career with, 76 Voss begins negotiator career at, 85 Voss on the JTTF, New York, 76, 77–78, 98 Fields, W. C., 178 financial negotiations. See also bargaining car-buying, 119, 188–90, 243 Chris discount, 180 getting a rent cut, 208–11 getting your counterparts to bid against themselves and, 181–85 MBA student and soliciting funds, 200–201 Fisher, Roger, 10–11, 252 Fooled by Randomness (Taleb), 215 framing effect, 12, 20 Freeh, Louis, 14 fundraising, 89–91 Gaddafi, Muammar, 99–100 Getting to Yes (Fisher and Ury), 11, 13, 14, 16, 20, 80, 98, 252 Giffe, George, Jr., 9–10 goals/outcome goals, 12, 52, 81, 95, 112, 160, 170, 174, 201, 211, 240, 242, 243 Ackerman model and, 206, 208 agreement or “yes” as, 94 ascertaining counterpart’s, 28, 231 bargaining styles and, 193, 195, 196 BATNA and, 252 best/worst range, 69, 253 extracting information as, 25, 47, 110, 147 four steps for setting, 253–54 human connection as, 72 Negotiation One Sheet, 252–54 win-win or compromise, 115, 116, 253 Griffin, William, 213–14, 216–17, 235, 244 Haiti as kidnap capital, 113–14 kidnapping case, 113–15, 133–35, 207–8 Harvard Negotiation Research Project, 2, 10–11 Harvard University, 4 executive negotiating course, 1, 5–8 Heen, Sheila, 5–6, 7 HelpLine, 81 “CareFronting,” 82, 84 Voss answering phones for, 81–84, 85 Heymann, Philip B., 14 hostage mentality, 159 hostage negotiation.


pages: 733 words: 179,391

Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo

"Robert Solow", Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Berlin Wall, Bernie Madoff, bitcoin, Bonfire of the Vanities, bonus culture, break the buck, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, Diane Coyle, diversification, diversified portfolio, double helix, easy for humans, difficult for computers, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, interest rate derivative, invention of the telegraph, Isaac Newton, James Watt: steam engine, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, merger arbitrage, meta analysis, meta-analysis, Milgram experiment, money market fund, moral hazard, Myron Scholes, Nick Leeson, old-boy network, out of africa, p-value, paper trading, passive investing, Paul Lévy, Paul Samuelson, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, quantitative hedge fund, quantitative trading / quantitative finance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Shiller, Sam Peltzman, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, survivorship bias, Thales and the olive presses, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

In fact, Bravo-Charlie is mathematically equal to Alfa-Delta plus $10,000 cash. Now, do you still want Alfa-Delta? If so, please get in touch with my publisher immediately so we can help you out with your investment needs. Clearly the rational choice is Bravo-Charlie. When the decision is put into these stark terms, everyone will choose BravoCharlie over Alfa-Delta, but only when the decision is framed in this particular way. For his work in documenting these framing effects, and many other departures from rationality, Kahneman was awarded the Nobel Prize in Economics in 2002, Tversky having died in 1996 (the Nobel Prize If You’re So Smart, Why Aren’t You Rich? • 59 isn’t awarded posthumously). Th is represented excellent work for two noneconomists. Now I should tell you that my MBA students hate this example. Hands shoot up immediately after I show them how irrational they were.

Adaptive markets offer a practical framework in which we can think systematically about taking on this challenge. The first step requires a subtle but important shift in our language. Instead of seeking to “change culture,” which seems naïve and hopelessly ambitious, suppose our objective is to engage in “behavioral risk management” instead.21 As we saw Tversky and Kahneman demonstrate in chapter 2, framing effects are important.22 Despite the fact that we’re referring to essentially the same goal, the latter phrase is more concrete, feasible, and—this is important—unassailable from a corporate board’s perspective. Using the framework of behavioral risk management, we see that human behavior is a factor in every type of corporate malfeasance. For a member of the board, it’s only prudent to take steps to manage those behaviors most likely to harm the business franchise.

See also “Quant Meltdown” (August 2007) fi nancial engineering, 212, 415 fi nancial sector, 330–332 fi nches, 226–227, 240, 244 FINRA (Financial Industry Regulatory Authority), 360 fi nancial technology, 248, 361, 399, 405 first-order false belief, 111 Fisher, Larry, 23 Fisher, Ronald Aylmer, 216–217 fi xed-income arbitrage, 243, 293 fi xed-rate commissions, 281 flash crashes, 358–359, 360 Food and Drug Administration (FDA), 404 food production, 8–9 footbridge dilemma, 339 foreign exchange, 12–16, 24, 38 Foundations of Economic Analysis (Samuelson), 177, 210, 212–213 Fouse, William L., 263 FOXP2 gene, 173–174 fractional reserve banking, 344 framing effects, 58–59, 388 France, 242 fraternal twins, 159, 161 Freddie Mac, 298, 379 Friedman, Milton, 25, 34 Fuld, Dick, 318 474 • Index functional magnetic resonance imaging, (fMRI), 77–78, 86, 88–89, 90, 101, 102, 186, 337, 338 funds of hedge funds, 293 futures contracts, 20, 34, 243, 268, 273, 276, 356 future value, 98 Galapagos Islands, 225–227 gambling, 17, 59–60, 67, 88–89, 91–92, 186 game theory, 170, 179, 212, 217, 336 Gaucher disease, 418, 419 Gaussian distribution (bell curve), 22, 273 Gazzaniga, Michael, 113, 115–117, 123, 313 Gekko effect, 348, 391 Gekko, Gordon (fictional character), 345, 346, 349, 387, 417 GenBank, 402–403 general equilibrium theory, 212, 213 genome sequencing, 401, 402 Genzyme, 419 geo-engineering, 416 Germany, 242 Gerrold, David, 190 Getmansky, Mila, 317, 376 Gibbs, Josiah Willard, 20, 210 Gibson, Rajna, 353 Gift of Fear, The (de Becker), 1 Gigerenzer, Gerd, 216 Gilovitch, Thomas, 68–69 Gimein, Mark, 317 Glimcher, Paul, 99 glucocerebrosidase, 419 Goldman Sachs, 242, 287, 295, 307, 308, 324 Goldfield, Jacob, 311 Good Night, Gorilla (Rathmann), 135 Google, 405 gorilla, 150 Gould, Stephen Jay, 171, 172 Government Accountability Office (GAO), 308, 311, 351–352 government bonds, 249, 292; U.S.


pages: 412 words: 115,266

The Moral Landscape: How Science Can Determine Human Values by Sam Harris

Albert Einstein, banking crisis, Bayesian statistics, cognitive bias, end world poverty, endowment effect, energy security, experimental subject, framing effect, hindsight bias, impulse control, John Nash: game theory, longitudinal study, loss aversion, meta analysis, meta-analysis, out of africa, pattern recognition, placebo effect, Ponzi scheme, Richard Feynman, risk tolerance, scientific worldview, stem cell, Stephen Hawking, Steven Pinker, the scientific method, theory of mind, ultimatum game, World Values Survey

But we do not merely fail—we fail reliably. We can, in other words, use reason to understand, quantify, and predict our violations of its norms. This has moral implications. We know, for instance, that the choice to undergo a risky medical procedure will be heavily influenced by whether its possible outcomes are framed in terms of survival rates or mortality rates. We know, in fact, that this framing effect is no less pronounced among doctors than among patients.74 Given this knowledge, physicians have a moral obligation to handle medical statistics in ways that minimize unconscious bias. Otherwise, they cannot help but inadvertently manipulate both their patients and one another, guaranteeing that some of the most important decisions in life will be unprincipled.75 Admittedly, it is difficult to know how we should treat all of the variables that influence our judgment about ethical norms.

If my next drive down the highway were guaranteed to deliver a cure for cancer, I would consider it the most ethically important act of my life. No doubt the role that probability is playing here could be experimentally calibrated. We could ask subjects whether they would impose a 50 percent chance of death upon two innocent people, a 10 percent chance on ten innocent people, etc. How we should view the role that probability plays in our moral judgments is not clear, however. It seems difficult to imagine ever fully escaping such framing effects. Science has long been in the values business. Despite a widespread belief to the contrary, scientific validity is not the result of scientists abstaining from making value judgments; rather, scientific validity is the result of scientists making their best effort to value principles of reasoning that link their beliefs to reality, through reliable chains of evidence and argument. This is how norms of rational thought are made effective.


Super Thinking: The Big Book of Mental Models by Gabriel Weinberg, Lauren McCann

affirmative action, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, anti-pattern, Anton Chekhov, autonomous vehicles, bank run, barriers to entry, Bayesian statistics, Bernie Madoff, Bernie Sanders, Black Swan, Broken windows theory, business process, butterfly effect, Cal Newport, Clayton Christensen, cognitive dissonance, commoditize, correlation does not imply causation, crowdsourcing, Daniel Kahneman / Amos Tversky, David Attenborough, delayed gratification, deliberate practice, discounted cash flows, disruptive innovation, Donald Trump, Douglas Hofstadter, Edward Lorenz: Chaos theory, Edward Snowden, effective altruism, Elon Musk, en.wikipedia.org, experimental subject, fear of failure, feminist movement, Filter Bubble, framing effect, friendly fire, fundamental attribution error, Gödel, Escher, Bach, hindsight bias, housing crisis, Ignaz Semmelweis: hand washing, illegal immigration, income inequality, information asymmetry, Isaac Newton, Jeff Bezos, John Nash: game theory, lateral thinking, loss aversion, Louis Pasteur, Lyft, mail merge, Mark Zuckerberg, meta analysis, meta-analysis, Metcalfe’s law, Milgram experiment, minimum viable product, moral hazard, mutually assured destruction, Nash equilibrium, Network effects, nuclear winter, offshore financial centre, p-value, Parkinson's law, Paul Graham, peak oil, Peter Thiel, phenotype, Pierre-Simon Laplace, placebo effect, Potemkin village, prediction markets, premature optimization, price anchoring, principal–agent problem, publication bias, recommendation engine, remote working, replication crisis, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Ronald Reagan, school choice, Schrödinger's Cat, selection bias, Shai Danziger, side project, Silicon Valley, Silicon Valley startup, speech recognition, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, survivorship bias, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, transaction costs, uber lyft, ultimatum game, uranium enrichment, urban planning, Vilfredo Pareto, wikimedia commons

If you visit news sites on the internet, then you probably know all about framing, or at least you should. For example, headlines have a framing effect, affecting the meaning people take away from stories. On August 31, 2015, three police officers responded to a 911 call about a burglary in progress. Unfortunately, the call did not specify an exact address, and the officers responded to the wrong house. Upon finding the back door unlocked, they entered, and encountered a dog. Gunfire ensued, and the dog, homeowner, and one of the officers were shot, all by officer gunfire. The homeowner and officer survived. Two headlines framed the incident in dramatically different ways. Framing Effect In a study by Ullrich Ecker and others, “The Effects of Subtle Misinformation in News Headlines,” presented in the December 2014 issue of the Journal of Experimental Psychology: Applied, students read an article about a small increase in burglary rates over the last year (0.2 percent) that was anomalous in a much larger decline over the past decade (10 percent).


Tyler Cowen - Stubborn Attachments A Vision for a Society of Free, Prosperous, and Responsible Individuals by Meg Patrick

"Robert Solow", agricultural Revolution, Berlin Wall, conceptual framework, Fall of the Berlin Wall, framing effect, hedonic treadmill, impulse control, Peter Singer: altruism, rent-seeking, The Wealth of Nations by Adam Smith, total factor productivity, trade route, transaction costs, trickle-down economics, Tyler Cowen: Great Stagnation, zero-sum game

., the United States 1946-91) greater wealth is correlated with lower levels of self-reported happiness; see Dieter (1984), Blanchflower and Oswald (2000), Diener and Oishi (2000), Myers (2000), Kenny (1999), Lane (1998), Frey and Stutzer (2000), and Easterlin (1995). On the United States, see (Frey and Stutzer 2002a, pp.76-7). For a criticism of the income-happiness from a time use perspective, see Kahneman et.al. (2006). 19 See Deaton (2007). 28 effects, surely talk about happiness is subject to framing effects as well (if anything it could be easier to recalibrate your language than to recalibrate your happiness expectations). The wealthy develop higher standards for reporting when they are “happy” or “very happy.” If you are a millionaire living next door to a billionaire, you might be less likely to report that you are ecstatically well-off even though your day to day existence is pretty sweet.


pages: 145 words: 41,453

You Are What You Read by Jodie Jackson

delayed gratification, Filter Bubble, framing effect, Hans Rosling, Mahatma Gandhi, Nelson Mandela, New Journalism, race to the bottom, Steve Jobs, Steven Pinker, yellow journalism

., The Vanishing Voter, Vintage, New York, 2003, p. 89. 8 Ibid. 9 Bureau of Justice Statistics: National Crime Victimization Survey, available at: https://pdfs.semanticscholar.org/77bd/0d613de2b1d38681466128d5b1ee1280c423.pdf 10 The Sentencing Project, available at: https://static.prisonpolicy.org/scans/sp/usno1.pdf 11 Ibid. 12 Gross, K., ‘Framing Persuasive Appeals: Episodic and Thematic Framing, Emotional Response, and Policy Opinion’, Political Psychology, 29(2), 2008, pp. 169–92. 13 Goffman, E., Frame Analysis: An Essay on the Organization of Experience, Harper & Row, New York, 1974, p. 21. 14 Druckman, J., ‘The Implications of Framing Effects for Citizen Competence’, Political Behavior, 23(3), 2001, p. 227. 15 Reuters News Report: Digital News report 2017, available at: https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Digital%20News%20Report%202017%20web_0.pdf MISREAD OR MISLED If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re misinformed. — Mark Twain News is often tweaked by the media in order to appeal to its audience base, attract new readers or make its stories more palatable and more exciting than the versions told by other news organisations.


pages: 199 words: 43,653

Hooked: How to Build Habit-Forming Products by Nir Eyal

Airbnb, AltaVista, Cass Sunstein, choice architecture, cognitive bias, cognitive dissonance, en.wikipedia.org, framing effect, game design, Google Glasses, IKEA effect, Inbox Zero, invention of the telephone, iterative process, Jeff Bezos, Lean Startup, Mahatma Gandhi, Mark Zuckerberg, meta analysis, meta-analysis, Oculus Rift, Paul Buchheit, Paul Graham, Peter Thiel, QWERTY keyboard, Richard Thaler, Silicon Valley, Silicon Valley startup, Snapchat, TaskRabbit, telemarketer, the new new thing, Toyota Production System, Y Combinator

For an example of how perception of a limited supply can increase sales, look no further than Amazon.com. My recent search for a DVD revealed there were “only 14 left in stock” (figure 18), while a search for a book I’ve had my eye on says only three copies remain. Is the world’s largest online retailer almost sold out of nearly everything I want to buy or are they using the scarcity heuristic to influence my buying behavior? FIGURE 18—“ONLY FOURTEEN LEFT IN STOCK”? The Framing Effect Context also shapes perception. In a social experiment, world-class violinist Joshua Bell decided to play a free impromptu concert in a Washington, D.C., subway station.9 Bell regularly sells out venues such as the Kennedy Center and Carnegie Hall for hundreds of dollars per ticket, but when placed in the context of the D.C. subway, his music fell upon deaf ears. Almost nobody knew they were walking past one of the most talented musicians in the world.


pages: 311 words: 130,761

Framing Class: Media Representations of Wealth and Poverty in America by Diana Elizabeth Kendall

Bernie Madoff, blue-collar work, Bonfire of the Vanities, call centre, David Brooks, declining real wages, Donald Trump, employer provided health coverage, ending welfare as we know it, fixed income, framing effect, Georg Cantor, Gordon Gekko, greed is good, haute couture, housing crisis, illegal immigration, income inequality, mortgage tax deduction, new economy, payday loans, Ponzi scheme, Ray Oldenburg, Richard Florida, Ronald Reagan, Saturday Night Live, telemarketer, The Great Good Place, Thorstein Veblen, trickle-down economics, union organizing, upwardly mobile, urban planning, working poor

VH1’s The Fabulous Life is an excellent example; in it the prices of a celebrity’s lavish possessions pop up on the TV screen as the story of the well-known individual’s life unfolds. Viewers get the “inside scoop” on the cost of birthday celebrations, clothes, residences, and private jet travel. The price of each item is carefully put into perspective for middle- and lower-class viewers. THE TWENTY-FOUR-KARAT GOLD FRAME: EFFECTS OF FRAMING THE WEALTHY The media’s framing of stories about the wealthy influences the opinions of people in other classes. Lacking personal encounters with extremely wealthy individuals, people in the middle, working, and poor classes look to the media for an insider’s view of how the “other half” lives. Television programs such as E!, Entertainment Tonight, Inside Edition, and Access Hollywood promise to take viewers behind the scenes to learn what goes on in the lives of the rich and famous.

If, however, the media present these middle-class problems as a form of victimization, the blame shifts to corporations and government officials. Even the poor and homeless may be portrayed as infringing on the rights and property of the middle class. As political scientist Shanto Iyengar states with regard to the media framing of poverty, “While there is as yet no well-developed theory of framing effects, it seems quite likely that these effects occur because the terms or ‘frames’ embodied by a stimulus subtly direct attention to particular reference points or considerations.”144 Similarly, 9781442202238.print.indb 206 2/10/11 10:47 AM Splintered Wooden Frames 207 media framing of stories about the middle class also directs audiences’ attention to particular reference points and considerations.


pages: 185 words: 52,089

Mastering Digital Photography: Jason Youn's Essential Guide to Understanding the Art & Science of Aperture, Shutter, Exposure, Light, & Composition by Jason Youn

en.wikipedia.org, framing effect, Wall-E

In a large print it can help keep the viewer from hunting and searching for the important parts. Pay attention for it when you watch a movie; guaranteed, you will see it being used. It could be the edges of a cockpit, or the frame of a doorway, or or trees in a forest. Below, Bob has come back to show us a common example of a frame within a frame. Here Bob is standing in a field waving. In the left picture he is alone; in the right, a tree creates a frame within a frame effect. The tree not only provides balance to Bob, but it also constricts the framing of the image to left and middle portions of the frame. Which do you think has a stronger composition? Bob was also kind enough to pose for a very cliche frame within a frame image. Again in the first image Bob is just in a field, in the next he is in the window of a house. This is probably one of the most common frame within a frame images that you will find in many text books.


pages: 256 words: 60,620

Think Twice: Harnessing the Power of Counterintuition by Michael J. Mauboussin

affirmative action, asset allocation, Atul Gawande, availability heuristic, Benoit Mandelbrot, Bernie Madoff, Black Swan, butter production in bangladesh, Cass Sunstein, choice architecture, Clayton Christensen, cognitive dissonance, collateralized debt obligation, Daniel Kahneman / Amos Tversky, deliberate practice, disruptive innovation, Edward Thorp, experimental economics, financial innovation, framing effect, fundamental attribution error, Geoffrey West, Santa Fe Institute, George Akerlof, hindsight bias, hiring and firing, information asymmetry, libertarian paternalism, Long Term Capital Management, loose coupling, loss aversion, mandelbrot fractal, Menlo Park, meta analysis, meta-analysis, money market fund, Murray Gell-Mann, Netflix Prize, pattern recognition, Philip Mirowski, placebo effect, Ponzi scheme, prediction markets, presumed consent, Richard Thaler, Robert Shiller, Robert Shiller, statistical model, Steven Pinker, The Wisdom of Crowds, ultimatum game

Likewise, skillful people who have suffered a period of poor outcomes are often a good bet, since luck evens out over time.11 Picking the Main Mistakes We Professionals Make The primary audience for this book is investors and businesspeople, although the concepts are relevant for other professionals as well. This book is neither a survey of common mistakes nor an exposition of one big theme. For instance, most books focus either on the components of prospect theory (loss aversion, overconfidence, framing effects, anchoring, and the confirmation bias) or they dwell on one important idea.12 Rather, I have tried to select the concepts that I have found most useful, based on my experience in the investment industry and through my study of psychology and science. Each of the following chapters discusses a common decision mistake, illustrates why that mistake is consequential, and offers some thoughts on how to manage the problem.


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

Know Your Values and Frame the Debate (White River Junction, VT: Chelsea Green, 2004). 11. This is called the anchoring effect. See discussions of anchoring and framing effects on judgments and preferences in Daniel Kahneman, Paul Slovic, and Amos Tversky, eds., Judgment under Uncertainty: Heuristics and Biases (Cambridge: Cambridge University Press, 1982); and Daniel Kahneman and Amos Tversky, eds., Choices, Values and Frames (New York: Cambridge University Press, 2000). For a popular and recent discussion, see Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011); and Richard Thaler and Cass Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness (New Haven and London: Yale University Press, 2008). 12. See the discussion of framing effects in the case of the introduction of lifecycle funds in U.S. 401(k) plans in Ning Tang, Olivia S.


pages: 241 words: 75,516

The Paradox of Choice: Why More Is Less by Barry Schwartz

accounting loophole / creative accounting, attribution theory, Atul Gawande, availability heuristic, Cass Sunstein, Daniel Kahneman / Amos Tversky, endowment effect, framing effect, hedonic treadmill, income per capita, job satisfaction, loss aversion, medical residency, mental accounting, Own Your Own Home, Pareto efficiency, positional goods, price anchoring, psychological pricing, RAND corporation, Richard Thaler, science of happiness, The Wealth of Nations by Adam Smith

Call this effect framing The classic paper on framing is D. Kahneman and A. Tversky, “Choices, Values, and Frames,” American Psychologist, 1984, 39, 341–350. Many other examples are collected in D. Kahneman and A. Tversky (eds.), Choices, Values, and Frames (New York: Cambridge University Press, 2000). In sum, just how well The relation between framing and subjective experience is well discussed by D. Frisch, “Reasons for Framing Effects,” Organizational Behavior and Human Decision Processes, 1993, 54, 399–429. we give disproportionate weight A.J. Sanford, N. Fay, A. Stewart, and L. Moxey, “Perspective in Statements of Quantity, with Implications for Consumer Psychology,” Psychological Science, 2002, 13, 130–134. Or suppose you are Many examples of phenomena discussed in this section can be found in articles collected in D.


pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan

"Robert Solow", Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy

Ross’s innovation was to reframe the prisoners’ dilemma as either the Wall Street game or the community game. The payoffs—and so the incentives to defect or cooperate—were identical. All that differed was that subjects were cued to think they were either Wall Street traders or community builders. Outside observers of the experiment predicted that the defection rates would be virtually identical for both versions of the game.6 But the framing effect was shockingly large. Those randomly assigned to play the Wall Street game defected nearly 70 percent of the time, more than twice as often as those in the community game. Ross and his colleagues also recorded what participants expected their partners would do, and in the Wall Street game, subjects defected in large part because they expected their partners were about to do the same. More than we ever imagined, the situation trumped the individual.


pages: 324 words: 87,064

Learning Ext Js by Shea Frederick

call centre, Firefox, framing effect, side project, web application

The simplest way of using it is without arguments: Ext.get('target').frame(); This causes the target element to radiate a single light blue ping to draw attention to the element, which may be useful in some scenarios. However, to make sure that the user knows about a more important event, we could use something like this: Ext.get('target').frame('ff0000', 3); The first argument is the hexadecimal color of the framing effect, in this case, an angry red. The second argument specifies the number of times the ping is to be repeated. So here, we're using three red pulses to indicate that something pretty bad is about to happen. These are the real strengths of the frame method: repetition, and the ability to use different colors to represent different situations and priorities. Woooo: ghosting Ghosts!-or rather ghosting—this is the term Ext JS gives to fading an element while it moves in a specified direction.


pages: 348 words: 83,490

More Than You Know: Finding Financial Wisdom in Unconventional Places (Updated and Expanded) by Michael J. Mauboussin

Albert Einstein, Andrei Shleifer, Atul Gawande, availability heuristic, beat the dealer, Benoit Mandelbrot, Black Swan, Brownian motion, butter production in bangladesh, buy and hold, capital asset pricing model, Clayton Christensen, clockwork universe, complexity theory, corporate governance, creative destruction, Daniel Kahneman / Amos Tversky, deliberate practice, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, dogs of the Dow, Drosophila, Edward Thorp, en.wikipedia.org, equity premium, Eugene Fama: efficient market hypothesis, fixed income, framing effect, functional fixedness, hindsight bias, hiring and firing, Howard Rheingold, index fund, information asymmetry, intangible asset, invisible hand, Isaac Newton, Jeff Bezos, Kenneth Arrow, Laplace demon, Long Term Capital Management, loss aversion, mandelbrot fractal, margin call, market bubble, Menlo Park, mental accounting, Milgram experiment, Murray Gell-Mann, Nash equilibrium, new economy, Paul Samuelson, Pierre-Simon Laplace, quantitative trading / quantitative finance, random walk, Richard Florida, Richard Thaler, Robert Shiller, Robert Shiller, shareholder value, statistical model, Steven Pinker, stocks for the long run, survivorship bias, The Wisdom of Crowds, transaction costs, traveling salesman, value at risk, wealth creators, women in the workforce, zero-sum game

Misusing behavioral-finance concepts can be as problematic as failing to acknowledge the role of psychology in investing. What’s the issue? We can express the essence of the poor-thinking problem with the following syllogism:Humans are irrational Markets are made up of humans Markets are irrational This logic stream appears to generate one of behavioral finance’s main conclusions. Hersh Shefrin, a leading behavioral-finance researcher, writes: “Behavioral finance assumes that heuristic-driven bias and framing effects cause market prices to deviate from fundamental values.”3 The simple (and somewhat intuitive) message is that the aggregation of irrational individuals must lead to an irrational market. To see the weakness in this case, we have to consider investor behavior on two levels: collective and individual. Collective behavior addresses the potentially irrational actions of groups. Individual behavior dwells on the fact that we all consistently fall into psychological traps, including overconfidence, anchoring and adjustment, improper framing, irrational commitment escalation, and the confirmation trap.


pages: 284 words: 84,169

Talk on the Wild Side by Lane Greene

Affordable Care Act / Obamacare, Albert Einstein, Boris Johnson, Donald Trump, ending welfare as we know it, experimental subject, facts on the ground, framing effect, Google Chrome, illegal immigration, invisible hand, meta analysis, meta-analysis, moral panic, natural language processing, obamacare, Ronald Reagan, Sapir-Whorf hypothesis, Snapchat, speech recognition, Steven Pinker, Turing test, Wall-E

It’s strategically critical, he argues, not to be suckered into using the opposing side’s frames. Republicans portray taxes as an affliction, and so promise “tax relief”. Democrats are too quick to follow, promising their own version of the same. So he thinks they should reframe taxes, emphasising the good things they pay for, calling them not a burden, but “membership fees”. There is some good evidence for the power of framing effects in politics – and not only from the polls of Frank Luntz. Lera Boroditsky, a psychologist who specialises in language and thought at the University of California San Diego, has researched how simple differences in metaphor make a big difference in the kind of policy solutions people support. For example, she and Paul Thibodeau gave one group of experimental subjects a news paragraph about a fictional town, Addison, beginning “Crime is a beast ravaging the city of Addison” (emphasis mine), and went on to describe the crime problem in detailed statistics.


pages: 292 words: 94,324

How Doctors Think by Jerome Groopman

affirmative action, Atul Gawande, Daniel Kahneman / Amos Tversky, deliberate practice, fear of failure, framing effect, index card, iterative process, lateral thinking, medical malpractice, medical residency, Menlo Park, pattern recognition, placebo effect, stem cell, theory of mind

is now the question you or your loved one should ask the physician. The cognitive mistakes that account for most misdiagnoses are not recognized by physicians; they largely reside below the level of conscious thinking. When you or your loved one asks simply, "What else could it be?" you help bring closer to the surface the reality of uncertainty in medicine. "What else could it be?" is a key safeguard against these errors in thinking: premature closure, framing effect, availability from recent experience, the bias that the hoofbeats are horses and not zebras. Each cognitive error constrains the pursuit of answers, and correcting the error helps the doctor think of a test or procedure that he didn't previously consider and can make the diagnosis. "Is there anything that doesn't fit?" may be your next question. This follow-up should further prompt the physician to pause and let his mind roam more broadly.


pages: 1,088 words: 228,743

Expected Returns: An Investor's Guide to Harvesting Market Rewards by Antti Ilmanen

Andrei Shleifer, asset allocation, asset-backed security, availability heuristic, backtesting, balance sheet recession, bank run, banking crisis, barriers to entry, Bernie Madoff, Black Swan, Bretton Woods, business cycle, buy and hold, buy low sell high, capital asset pricing model, capital controls, Carmen Reinhart, central bank independence, collateralized debt obligation, commoditize, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, debt deflation, deglobalization, delta neutral, demand response, discounted cash flows, disintermediation, diversification, diversified portfolio, dividend-yielding stocks, equity premium, Eugene Fama: efficient market hypothesis, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, framing effect, frictionless, frictionless market, G4S, George Akerlof, global reserve currency, Google Earth, high net worth, hindsight bias, Hyman Minsky, implied volatility, income inequality, incomplete markets, index fund, inflation targeting, information asymmetry, interest rate swap, invisible hand, Kenneth Rogoff, laissez-faire capitalism, law of one price, London Interbank Offered Rate, Long Term Capital Management, loss aversion, margin call, market bubble, market clearing, market friction, market fundamentalism, market microstructure, mental accounting, merger arbitrage, mittelstand, moral hazard, Myron Scholes, negative equity, New Journalism, oil shock, p-value, passive investing, Paul Samuelson, performance metric, Ponzi scheme, prediction markets, price anchoring, price stability, principal–agent problem, private sector deleveraging, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, reserve currency, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Robert Shiller, Robert Shiller, savings glut, selection bias, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stochastic volatility, stocks for the long run, survivorship bias, systematic trading, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs, tulip mania, value at risk, volatility arbitrage, volatility smile, working-age population, Y2K, yield curve, zero-coupon bond, zero-sum game

The authors stress that investors only overweight salient low-probability events—a point that may resolve the tension between PT and the idea that blackswan-type low-probability events, events that investors think are nigh impossible or do not think about at all, are underweighted. PT itself does not generate many testable predictions. It needs to be combined with other assumptions, such as narrow framing or the house money effect (as discussed below). Figure 6.1. Prospect theory’s value function and probability-weighting function (stylized forms). Framing effects One feature of PT preferences is that people derive decision utility from the gains and losses of a single trade. Ignoring the rest of wealth implies narrow framing. Narrow framing involves analyzing problems in too isolated a fashion. It can be caused by the fact that our cognitive resources are limited. Evaluating each trade on a standalone basis is easier and may be more natural than assessing it by its contribution to our total portfolio, as modern portfolio theory prescribes.

forward premium puzzle forward rate bias forward rate curve (C-P BRP) forward-looking asset return measures building block approaches carry strategies value strategies forward-looking indicators asset class real yields carry strategies contrarian approach historical records market mispricing shortcomings time-varying risk premia value strategies forward-looking measures asset returns carry strategies DDM ERP long-term returns value measures framing effects, PT French, Kenneth R. see also Fama—French front-end trading fund of funds (FoF) fundamental indices funding liquidity funding rate spreads, CRP future trends rise of China deflation effect of 2007—2008 crisis emerging markets inflation nextyears risky assets sovereign creditworthiness futures, commodity FX see foreign exchange G10 currencies cross-asset selection models currency carry FX markets see also currency . . .


pages: 327 words: 103,336

Everything Is Obvious: *Once You Know the Answer by Duncan J. Watts

active measures, affirmative action, Albert Einstein, Amazon Mechanical Turk, Black Swan, business cycle, butterfly effect, Carmen Reinhart, Cass Sunstein, clockwork universe, cognitive dissonance, coherent worldview, collapse of Lehman Brothers, complexity theory, correlation does not imply causation, crowdsourcing, death of newspapers, discovery of DNA, East Village, easy for humans, difficult for computers, edge city, en.wikipedia.org, Erik Brynjolfsson, framing effect, Geoffrey West, Santa Fe Institute, George Santayana, happiness index / gross national happiness, high batting average, hindsight bias, illegal immigration, industrial cluster, interest rate swap, invention of the printing press, invention of the telescope, invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, lake wobegon effect, Laplace demon, Long Term Capital Management, loss aversion, medical malpractice, meta analysis, meta-analysis, Milgram experiment, natural language processing, Netflix Prize, Network effects, oil shock, packet switching, pattern recognition, performance metric, phenotype, Pierre-Simon Laplace, planetary scale, prediction markets, pre–internet, RAND corporation, random walk, RFID, school choice, Silicon Valley, social intelligence, statistical model, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, The Death and Life of Great American Cities, the scientific method, The Wisdom of Crowds, too big to fail, Toyota Production System, ultimatum game, urban planning, Vincenzo Peruggia: Mona Lisa, Watson beat the top human players on Jeopardy!, X Prize

See North et al. (1997) for details on the wine study, Berger and Fitzsimons (2008) for the study on Gatorade, and Mandel and Johnson (2002) for the online shopping study. See Bargh et al. (1996) for other examples of priming. 12. For more details and examples of anchoring and adjustment, see Chapman and Johnson (1994), Ariely et al. (2003), and Tversky and Kahneman (1974). 13. See Griffin et al. (2005) and Bettman et al. (1998) for examples of framing effects on consumer behavior. See Payne, Bettman, and Johnson (1992) for a discussion of what they call constructive preferences, including preference reversal. 14. See Tversky and Kahneman (1974) for a discussion of “availability bias.” See Gilbert (2006) for a discussion of what he calls “presentism.” See Bargh and Chartrand (1999) and Schwarz (2004) for more on the importance of “fluency.” 15.


pages: 304 words: 22,886

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler, Cass R. Sunstein

Al Roth, Albert Einstein, asset allocation, availability heuristic, call centre, Cass Sunstein, choice architecture, continuous integration, Daniel Kahneman / Amos Tversky, desegregation, diversification, diversified portfolio, endowment effect, equity premium, feminist movement, fixed income, framing effect, full employment, George Akerlof, index fund, invisible hand, late fees, libertarian paternalism, loss aversion, Mahatma Gandhi, Mason jar, medical malpractice, medical residency, mental accounting, meta analysis, meta-analysis, Milgram experiment, money market fund, pension reform, presumed consent, price discrimination, profit maximization, rent-seeking, Richard Thaler, Right to Buy, risk tolerance, Robert Shiller, Robert Shiller, Saturday Night Live, school choice, school vouchers, transaction costs, Vanguard fund, Zipcar

If you’re like most people, the doctor’s statement will sound pretty alarming, and you might not have the operation. The Automatic System thinks: “A significant number of people are dead, and I might be one of them!” In numerous experiments, people react very differently to the information that “ninety of one hundred are alive” than to the information that “ten of one hundred are dead”—even though the content of the two statements is exactly the same. Even experts are subject to framing effects. When doctors are told that “ninety of one hundred are alive,” they are more likely to recommend the operation than if told that “ten of one hundred are dead.”14 Framing matters in many domains. When credit cards started to become popular forms of payment in the 1970s, some retail merchants wanted to charge different prices to their cash and credit card customers. (Credit card companies typically charge retailers 1 percent of each sale.)


pages: 353 words: 101,130

Schild's Ladder by Greg Egan

framing effect, gravity well, invisible hand, Turing machine

"I don't think it's one creature," Tchicaya said. "I think we've found an oasis in the desert." The shadow now dominated the view completely, a sight as overwhelming as the border from Pachner, but its exact form remained elusive. "We have to get those probes to go faster," Mariama complained. A tiny patch of color and detail appeared suddenly at the center of the object, spreading slowly through the grayness. The framing effect was confusing; Tchicaya found it harder than ever to interpret the probe image. Things that might have been xennobes were moving around on a roughly spherical surface; the scape labeled them as being hundreds of times larger than the rabbits, but they looked like mites crawling over an elephant. The scale of the structure was extraordinary; if an airflower was the size of a daisy, this was a floating mountain, an asteroid.


Lessons-Learned-in-Software-Testing-A-Context-Driven-Approach by Anson-QA

anti-pattern, Chuck Templeton: OpenTable:, finite state, framing effect, full employment, information retrieval, job automation, knowledge worker, lateral thinking, Ralph Nader, Richard Feynman, side project, Silicon Valley, statistical model, web application

I am more likely to pay attention to test results that really do confirm my opinion of the product.  Availability bias. If I can readily bring to mind a scenario in which a user will behave in a certain way, I will also tend to think that behavior is more likely.  Primacy bias. I will give more credence to the first observations I make.  Recency bias. I will give more credence to the most recent observations I make.  Framing effect. My reaction to a bug report is strongly related to how it's phrased, regardless of what it means.  Prominence bias. I will give more weight to the opinions of users I happen to know. 41  Representativeness bias. I expect that small problems probably have small causes, whereas large problems require large causes. You can't avoid these biases. They are, to a large extent, hard-wired into our brains.


pages: 416 words: 118,592

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel

accounting loophole / creative accounting, Albert Einstein, asset allocation, asset-backed security, backtesting, beat the dealer, Bernie Madoff, BRICs, butter production in bangladesh, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial innovation, fixed income, framing effect, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Long Term Capital Management, loss aversion, margin call, market bubble, money market fund, mortgage tax deduction, new economy, Own Your Own Home, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, stocks for the long run, survivorship bias, The Myth of the Rational Market, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond

A sure loss of $750. 2. A 75% chance to lose $1,000 and a 25% chance to lose nothing. Note that the expected values of the two alternatives are the same—that is, a loss of $750. But almost 90 percent of the subjects tested chose alternative (2), the gamble. In the face of sure losses, people seem to exhibit risk-seeking behavior. Kahneman and Tversky also discovered a related and important “framing” effect. The way choices are framed to the decision maker can lead to quite different outcomes. They posed the following problem. 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 estimates of the consequences of the programs are as follows: If Program A is adopted, 200 people will be saved.


pages: 336 words: 113,519

The Undoing Project: A Friendship That Changed Our Minds by Michael Lewis

Albert Einstein, availability heuristic, Cass Sunstein, choice architecture, complexity theory, Daniel Kahneman / Amos Tversky, Donald Trump, Douglas Hofstadter, endowment effect, feminist movement, framing effect, hindsight bias, John von Neumann, Kenneth Arrow, loss aversion, medical residency, Menlo Park, Murray Gell-Mann, Nate Silver, New Journalism, Paul Samuelson, Richard Thaler, Saturday Night Live, Stanford marshmallow experiment, statistical model, the new new thing, Thomas Bayes, Walter Mischel, Yom Kippur War

There he oversaw the Office of Information and Regulatory Affairs and made scores of small changes that had big effects on the daily lives of all Americans. The changes Sunstein made had a unifying theme: They sprang directly or indirectly from the work of Danny and Amos. You couldn’t say that Danny and Amos’s work led President Obama to ban federal employees from texting while driving, but it wasn’t hard to draw a line from their work to that act. The federal government now became sensitive to both loss aversion and framing effects: People didn’t choose between things, they chose between descriptions of things. The fuel labels on new automobiles went from listing only miles per gallon to including the number of gallons a car consumed every hundred miles. What used to be called the food pyramid became MyPlate, a graphic of a dinner plate with divisions for each of the five food groups, and it was suddenly easier for Americans to see what made for a healthy diet.


pages: 401 words: 119,488

Smarter Faster Better: The Secrets of Being Productive in Life and Business by Charles Duhigg

Air France Flight 447, Asperger Syndrome, Atul Gawande, Black Swan, cognitive dissonance, Daniel Kahneman / Amos Tversky, David Brooks, digital map, epigenetics, Erik Brynjolfsson, framing effect, hiring and firing, index card, John von Neumann, knowledge worker, Lean Startup, Malcom McLean invented shipping containers, meta analysis, meta-analysis, new economy, Saturday Night Live, Silicon Valley, Silicon Valley startup, statistical model, Steve Jobs, the scientific method, theory of mind, Toyota Production System, William Langewiesche, Yom Kippur War

question was framed In an email sent in response to fact-checking questions, the author of this study, Stephen Hoch, wrote: “The only other thing that I might add is that old ideas can get in the way of new ideas, creating interference and essentially blocking the thought process. One way to overcome the interference is to take a break so that the old ideas die down in terms of their salience.” hard to dislodge Irwin P. Levin, Sandra L. Schneider, and Gary J. Gaeth, “All Frames Are Not Created Equal: A Typology and Critical Analysis of Framing Effects,” Organizational Behavior and Human Decision Processes 76, no. 2 (1998): 149–88; Hilary A. Llewellyn-Thomas, M. June McGreal, and Elaine C. Thiel, “Cancer Patients’ Decision Making and Trial-Entry Preferences: The Effects of ‘Framing’ Information About Short-Term Toxicity and Long-Term Survival,” Medical Decision Making 15, no. 1 (1995): 4–12; David E. Bell, Howard Raiffa, and Amos Tversky, Decision Making: Descriptive, Normative, and Prescriptive Interactions (Cambridge: Cambridge University Press, 1988); Amos Tversky and Daniel Kahneman, “Rational Choice and the Framing of Decisions,” The Journal of Business 59, no. 4, part 2 (1986): S251–78.


pages: 482 words: 121,672

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Eleventh Edition) by Burton G. Malkiel

accounting loophole / creative accounting, Albert Einstein, asset allocation, asset-backed security, beat the dealer, Bernie Madoff, bitcoin, butter production in bangladesh, buttonwood tree, buy and hold, capital asset pricing model, compound rate of return, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, Detroit bankruptcy, diversification, diversified portfolio, dogs of the Dow, Edward Thorp, Elliott wave, Eugene Fama: efficient market hypothesis, experimental subject, feminist movement, financial innovation, financial repression, fixed income, framing effect, George Santayana, hindsight bias, Home mortgage interest deduction, index fund, invisible hand, Isaac Newton, Long Term Capital Management, loss aversion, margin call, market bubble, money market fund, mortgage tax deduction, new economy, Own Your Own Home, passive investing, Paul Samuelson, pets.com, Ponzi scheme, price stability, profit maximization, publish or perish, purchasing power parity, RAND corporation, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, stocks for the long run, survivorship bias, the rule of 72, The Wisdom of Crowds, transaction costs, Vanguard fund, zero-coupon bond, zero-sum game

A sure loss of $750. 2. A 75 percent chance to lose $1,000 and a 25 percent chance to lose nothing. Note that the expected values of the two alternatives are the same—that is, a loss of $750. But almost 90 percent of the subjects tested chose alternative (2), the gamble. In the face of sure losses, people seem to exhibit risk-seeking behavior. Kahneman and Tversky also discovered a related and important “framing” effect. The way choices are framed to the decision maker can lead to quite different outcomes. They posed the following problem. 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 estimates of the consequences of the programs are as follows: If Program A is adopted, 200 people will be saved.


pages: 1,261 words: 294,715

Behave: The Biology of Humans at Our Best and Worst by Robert M. Sapolsky

autonomous vehicles, Bernie Madoff, biofilm, blood diamonds, British Empire, Broken windows theory, Brownian motion, car-free, clean water, cognitive dissonance, corporate personhood, corporate social responsibility, Daniel Kahneman / Amos Tversky, delayed gratification, desegregation, different worldview, double helix, Drosophila, Edward Snowden, en.wikipedia.org, epigenetics, Flynn Effect, framing effect, fudge factor, George Santayana, global pandemic, hiring and firing, illegal immigration, impulse control, income inequality, John von Neumann, Loma Prieta earthquake, long peace, longitudinal study, loss aversion, Mahatma Gandhi, meta analysis, meta-analysis, Mohammed Bouazizi, Monkeys Reject Unequal Pay, mouse model, mutually assured destruction, Nelson Mandela, Network effects, out of africa, Peter Singer: altruism, phenotype, placebo effect, publication bias, RAND corporation, risk tolerance, Rosa Parks, selective serotonin reuptake inhibitor (SSRI), self-driving car, Silicon Valley, social intelligence, Stanford marshmallow experiment, Stanford prison experiment, stem cell, Steven Pinker, strikebreaker, theory of mind, transatlantic slave trade, traveling salesman, trickle-down economics, twin studies, ultimatum game, Walter Mischel, wikimedia commons, zero-sum game

., “Priming In-group Favoritism: The Impact of Normative Scripts in the Minimal Group Paradigm,” JESP 37 (2001): 316; C. Zogmaister et al., “The Impact of Loyalty and Equality on Implicit Ingroup Favoritism,” Group Processes & Intergroup Relations 11 (2008): 493. 33. J. Christensen and A. Gomila, “Moral Dilemmas in Cognitive Neuroscience of Moral Decision-Making: A Principled Review,” Nsci Biobehav Rev 36 (2012): 1249; L. Petrinovich and P. O’Neill, “Influence of Wording and Framing Effects on Moral Intuitions,” Ethology and Sociobiology 17 (1996): 145; R. O’Hara et al., “Wording Effects in Moral Judgments,” Judgment and Decision Making 5 (2010): 547; R. Zahn et al., “The Neural Basis of Human Social Values: Evidence from Functional MRI,” Cerebral Cortex 19 (2009): 276. 34. D. Butz et al., “Liberty and Justice for All? Implications of Exposure to the U.S. Flag for Intergroup Relations,” PSPB 33 (2007): 396; M.

Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions (New York: Harper Perennial, 2010). 21. P. Singer, “Famine, Affluence, and Morality,” Philosophy and Public Affairs 1 (1972) 229. 22. D. A. Smalia et al., “Sympathy and Callousness: The Impact of Deliberative Thought on Donations to Identifiable and Statistical Victims,” Organizational Behav and Hum Decision Processes 102 (2007): 143; L. Petrinovich and P. O’Neill, “Influence of Wording and Framing Effects on Moral Intuitions,” Ethology and Sociobiology 17 (1996): 145; L. Petrinovich et al., “An Empirical Study of Moral Intuitions: Toward an Evolutionary Ethics,” JPSP 64 (1993): 467; R. E. O’Hara et al., “Wording Effects in Moral Judgments,” Judgment and Decision Making 5 (2010): 547. 23. A. Cohn et al., “Business Culture and Dishonesty in the Banking Industry,” Nat 516 (2014): 86. See also M.


pages: 402 words: 129,876

Bad Pharma: How Medicine Is Broken, and How We Can Fix It by Ben Goldacre

data acquisition, framing effect, if you build it, they will come, illegal immigration, income per capita, meta analysis, meta-analysis, placebo effect, publication bias, randomized controlled trial, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Simon Singh, WikiLeaks

Study of Neurontin: Titrate to Effect, Profile of Safety (STEPS) Trial: A Narrative Account of a Gabapentin Seeding Trial. Arch Intern Med. 2011 Jun 27;171(12):1100–7. 35 I recommend this book as an introduction to ‘shared decision making’ (I helped on one chapter): Gigerenzer G, Muir G. Better Doctors, Better Patients, Better Decisions: Envisioning Health Care 2020. 1st ed. MIT Press; 2011. 36 Malenka DJ, Baron JA, Johansen S, Wahrenberger JW, Ross JM. The framing effect of relative and absolute risk. J Gen Intern Med. 1993 Oct;8(10):543–8. 37 Bucher HC, Weinbacher M, Gyr K. Influence of method of reporting study results on decision of physicians to prescribe drugs to lower cholesterol concentration. BMJ. 1994 Sep 24;309(6957):761–4. 38 Fahey T, Griffiths S, Peters TJ. Evidence based purchasing: understanding results of clinical trials and systematic reviews.


pages: 577 words: 149,554

The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey by Michael Huemer

Cass Sunstein, Chelsea Manning, cognitive dissonance, cuban missile crisis, Daniel Kahneman / Amos Tversky, en.wikipedia.org, Eratosthenes, experimental subject, framing effect, Gini coefficient, illegal immigration, impulse control, Isaac Newton, Julian Assange, laissez-faire capitalism, Machinery of Freedom by David Friedman, Milgram experiment, moral hazard, Phillip Zimbardo, profit maximization, profit motive, Ralph Nader, RAND corporation, rent-seeking, Ronald Coase, Stanford prison experiment, The Wealth of Nations by Adam Smith, unbiased observer, uranium enrichment, WikiLeaks

For instance, whether I should break a promise depends upon whether my available alternatives would violate duties more stringent than the duty to keep that promise. 2 Courtois et al. 1999, part 1. 3 See Caplan n.d. for discussion of varieties of anarchism. For defenses of socialist anarchism, see Bakunin 1972; Kropotkin 2002. 4 See Tetlock 2005 on the difficulty of political prediction; but see also Caplan 2007a for a qualified defense of political experts. 5 For a sampling, see Tversky and Kahnemann 1986 on framing effects; Arkes and Blumer 1985 on the influence of sunk costs; Tversky 1969 on intransitive preferences; and the various papers in Kahneman et al. 1982 and Gilovich et al. 2002. 6 Philosophers often understand the principle of charity as the principle that, in interpreting others, one must ascribe mostly true beliefs to them (Davidson 1990, 129–30). In my view, the more fundamental principle is that one must ascribe mostly rational beliefs to others (see Huemer 2005, 159–61).


pages: 687 words: 189,243

A Culture of Growth: The Origins of the Modern Economy by Joel Mokyr

"Robert Solow", Andrei Shleifer, barriers to entry, Berlin Wall, business cycle, clockwork universe, cognitive dissonance, Copley Medal, creative destruction, David Ricardo: comparative advantage, delayed gratification, deliberate practice, Deng Xiaoping, Edmond Halley, epigenetics, Fellow of the Royal Society, financial independence, framing effect, germ theory of disease, Haber-Bosch Process, hindsight bias, income inequality, information asymmetry, invention of movable type, invention of the printing press, invisible hand, Isaac Newton, Jacquard loom, Jacques de Vaucanson, James Watt: steam engine, Johannes Kepler, John Harrison: Longitude, Joseph Schumpeter, knowledge economy, labor-force participation, land tenure, law of one price, Menlo Park, moveable type in China, new economy, phenotype, price stability, principal–agent problem, rent-seeking, Republic of Letters, Ronald Reagan, South Sea Bubble, statistical model, survivorship bias, the market place, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, transaction costs, ultimatum game, World Values Survey, Wunderkammern

The historical evidence that coercion actually works at the level of values, based on the experience of political revolutions from the French to the Russian to the Iranian, is rather mixed. But clearly government-controlled entities, such as schools and the military, can reproduce certain elements of socialization including a belief in punctuality, discipline, temperance, and the virtuousness of obedience, hard work, and technology.9 Salient events bias: Highly dramatic and traumatic events can have a discontinuous effect on culture through powerful framing effects. Such catastrophes as the Black Death, the Holocaust, or 9/11 changed ideology and beliefs through their powerful challenge to existing beliefs. Such salient events are especially important for political ideology and the area of social “values” that pertain to the role of the state. Major and dramatic failures of the free market create more support for a regulated and managed economy (as happened in the industrialized West during the Great Depression of the 1930s), whereas major failures of a managed economy such as the former Soviet bloc increased ideological support for a free market economy both in the affected areas and in those competing with them.10 Biases should not be regarded as parametrically given; they are time-variant and historically contingent.


How Emotions Are Made: The Secret Life of the Brain by Lisa Feldman Barrett

airport security, Albert Einstein, Albert Michelson, Drosophila, en.wikipedia.org, epigenetics, framing effect, Google Glasses, Isaac Newton, longitudinal study, luminiferous ether, meta analysis, meta-analysis, phenotype, placebo effect, randomized controlled trial, Shai Danziger, Skype, Steven Pinker, the scientific method, theory of mind, Thomas Kuhn: the structure of scientific revolutions

“Nothing Tastes as Good as Thin Feels: Low Positive Emotion Differentiation and Weight-Loss Activities in Anorexia Nervosa.” Clinical Psychological Science 2 (4): 514–531. Seminowicz, D. A., H. S. Mayberg, A. R. McIntosh, K. Goldapple, S. Kennedy, Z. Segal, and S. Rafi-Tari. 2004. “Limbic-Frontal Circuitry in Major Depression: A Path Modeling Metanalysis.” Neuroimage 22 (1): 409–418. Seo, M.-G., B. Goldfarb, and L. F. Barrett. 2010. “Affect and the Framing Effect Within Individuals Across Time: Risk Taking in a Dynamic Investment Game.” Academy of Management Journal 53: 411–431. Seruga, Bostjan, Haibo Zhang, Lori J. Bernstein, and Ian F. Tannock. 2008. “Cytokines and Their Relationship to the Symptoms and Outcome of Cancer.” Nature Reviews Cancer 8 (11): 887–899. Settle, Ray H., Barbara A. Sommerville, James McCormick, and Donald M. Broom. 1994. “Human Scent Matching Using Specially Trained Dogs.”


pages: 924 words: 196,343

JavaScript & jQuery: The Missing Manual by David Sawyer McFarland

Firefox, framing effect, HyperCard, information retrieval, Ruby on Rails, Steve Jobs, web application

For example, since the debugger doesn’t keep track of a counter variable in a for loop (For Loops), you can add this variable, and as you go step by step through the loop, you can see how the counter changes each time through the loop. You can think of this Watch list as a kind of a continual console.log() command. It prints out the value of a particular variable or expression at the time a particular line of code is run. The Watch list offers valuable insight into your program, providing a kind of freeze-frame effect so you can find exactly where in your script an error occurs. For example, if you know that a particular variable holds a number value, you can go step by step through the script and see what value gets stored in the variable when it’s first created and see how its value gets modified as the program runs. If, after you click the Step Through or Step Into buttons, you see the variable’s value change to something you didn’t expect, then you’ve probably found the line where the error is introduced.


pages: 685 words: 203,949

The Organized Mind: Thinking Straight in the Age of Information Overload by Daniel J. Levitin

airport security, Albert Einstein, Amazon Mechanical Turk, Anton Chekhov, Bayesian statistics, big-box store, business process, call centre, Claude Shannon: information theory, cloud computing, cognitive bias, complexity theory, computer vision, conceptual framework, correlation does not imply causation, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, en.wikipedia.org, epigenetics, Eratosthenes, Exxon Valdez, framing effect, friendly fire, fundamental attribution error, Golden Gate Park, Google Glasses, haute cuisine, impulse control, index card, indoor plumbing, information retrieval, invention of writing, iterative process, jimmy wales, job satisfaction, Kickstarter, life extension, longitudinal study, meta analysis, meta-analysis, more computing power than Apollo, Network effects, new economy, Nicholas Carr, optical character recognition, Pareto efficiency, pattern recognition, phenotype, placebo effect, pre–internet, profit motive, randomized controlled trial, Rubik’s Cube, shared worldview, Skype, Snapchat, social intelligence, statistical model, Steve Jobs, supply-chain management, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Turing test, ultimatum game, zero-sum game

People are more likely to choose surgery in the first case and radiation in the second. In the first pair of scenarios, our attention is apparently drawn to the difference in five-year outcomes, where 34% are alive from surgery but only 22% from radiation. The framing of the second pair of scenarios apparently draws our attention to the difference in risk of the procedure itself: Radiation reduces the risk of immediate death from 10% to 0%. The framing effect was observed not just in patients but in experienced physicians and statistically sophisticated businesspeople. Another aspect of framing is that most of us are better with pictures than with raw numbers, one of the motivations for changing the university calculus curriculum to use graphic-based presentations of difficult material. One way that has been tried by doctors to help patients better understand risks is to display visually the various outcomes for a hypothetical group of 100 patients.


Guide to LaTeX by Helmut Kopka, Patrick W. Daly

centre right, Donald Knuth, framing effect, hypertext link, invention of movable type, Menlo Park

The opposite, a parbox within an LR box, is also possible, and is easy to visualize if one keeps in mind that every box is a unit, treated by LATEX as a single character of the corresponding size. A parbox inside an \fbox command has the effect that the entire parbox is framed. The present structure was made with \fbox{\fbox{\parbox{10cm}{A parbox...}}} This is a parbox of width 10 cm inside a framebox inside a second framebox, which thus produces the double framing effect. Enclosing a parbox inside a \raisebox allows vertical displacements of any desired amount. The two boxes here both have positioning [b], but the one at the right has been produced with: abcdefghi jklmnopqr \raisebox{1cm}{\begin{minipage}[b]{2.5cm} stuvwxyz a b c d e ... x y z\\ baseline \underline{baseline} \end{minipage} } which displaces it upwards by 1 cm. baseline A very useful structure is one in which minipage environments are positioned relative to one another inside an enclosing minipage.


Global Catastrophic Risks by Nick Bostrom, Milan M. Cirkovic

affirmative action, agricultural Revolution, Albert Einstein, American Society of Civil Engineers: Report Card, anthropic principle, artificial general intelligence, Asilomar, availability heuristic, Bill Joy: nanobots, Black Swan, carbon-based life, cognitive bias, complexity theory, computer age, coronavirus, corporate governance, cosmic microwave background, cosmological constant, cosmological principle, cuban missile crisis, dark matter, death of newspapers, demographic transition, Deng Xiaoping, distributed generation, Doomsday Clock, Drosophila, endogenous growth, Ernest Rutherford, failed state, feminist movement, framing effect, friendly AI, Georg Cantor, global pandemic, global village, Gödel, Escher, Bach, hindsight bias, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, Kevin Kelly, Kuiper Belt, Law of Accelerating Returns, life extension, means of production, meta analysis, meta-analysis, Mikhail Gorbachev, millennium bug, mutually assured destruction, nuclear winter, P = NP, peak oil, phenotype, planetary scale, Ponzi scheme, prediction markets, RAND corporation, Ray Kurzweil, reversible computing, Richard Feynman, Ronald Reagan, scientific worldview, Singularitarianism, social intelligence, South China Sea, strong AI, superintelligent machines, supervolcano, technological singularity, technoutopianism, The Coming Technological Singularity, Tunguska event, twin studies, uranium enrichment, Vernor Vinge, War on Poverty, Westphalian system, Y2K

Evidence from molecular systematics for decreased avian diversification in the Pleistocene epoch. Proc. Nat!. Acad. Sci. ( USA), 92, 5832-5835 . · 4· M i lle n n i a l te n d e n cies i n res p o n ses to a p ocaly ptic th reats ]ames ]. Hughes 4.1 Introduction Aaron Wildavsky proposed in 1987 that cultural orientations such as egalitarianism and individualism frame public perceptions of technological risks, and since then a body of empirical research has grown to affirm the risk­ framing effects of personality and culture (Dake, 1991; Gastil et al., 2005; Kahan, 2008). Most of these studies , however, have focused on relatively mundane risks, such as handguns, nuclear power, genetically modified food, and cellphone radiation. In the contemplation of truly catastrophic risks - risks to the future of the species from technology or natural threats - a different and deeper set of cognitive biases come into play, the millennia!


pages: 1,073 words: 314,528

Strategy: A History by Lawrence Freedman

Albert Einstein, anti-communist, Anton Chekhov, Ayatollah Khomeini, barriers to entry, battle of ideas, Black Swan, British Empire, business process, butterfly effect, centre right, Charles Lindbergh, circulation of elites, cognitive dissonance, coherent worldview, collective bargaining, complexity theory, conceptual framework, corporate raider, correlation does not imply causation, creative destruction, cuban missile crisis, Daniel Kahneman / Amos Tversky, defense in depth, desegregation, Edward Lorenz: Chaos theory, en.wikipedia.org, endogenous growth, endowment effect, Ford paid five dollars a day, framing effect, Frederick Winslow Taylor, Gordon Gekko, greed is good, information retrieval, interchangeable parts, invisible hand, John Nash: game theory, John von Neumann, Kenneth Arrow, lateral thinking, linear programming, loose coupling, loss aversion, Mahatma Gandhi, means of production, mental accounting, Murray Gell-Mann, mutually assured destruction, Nash equilibrium, Nelson Mandela, Norbert Wiener, Norman Mailer, oil shock, Pareto efficiency, performance metric, Philip Mirowski, prisoner's dilemma, profit maximization, race to the bottom, Ralph Nader, RAND corporation, Richard Thaler, road to serfdom, Ronald Reagan, Rosa Parks, shareholder value, social intelligence, Steven Pinker, strikebreaker, The Chicago School, The Myth of the Rational Market, the scientific method, theory of mind, Thomas Davenport, Thomas Kuhn: the structure of scientific revolutions, Torches of Freedom, Toyota Production System, transaction costs, ultimatum game, unemployed young men, Upton Sinclair, urban sprawl, Vilfredo Pareto, War on Poverty, women in the workforce, Yogi Berra, zero-sum game

Probabilities are routinely miscalculated, so … people … assume that outcomes which are very probable are less likely than they really are, that outcomes which are quite unlikely are more likely than they are, and that extremely improbable, but still possible, outcomes have no chance at all of happening. They also tend to view decisions in isolation, rather than as part of a bigger picture.13 Of particular importance were “framing effects.” These were mentioned earlier as having been identified by Goffman and used in explanations of how the media helped shape public opinion. Framing helped explain how choices came to be viewed differently by altering the relative salience of certain features. Individuals compared alternative courses of action by focusing on one aspect, often randomly chosen, rather than keep in the frame all key aspects.14 Another important finding concerned loss aversion.