Rational Choice and the Framing of Decisions:

This week was based on the article by Kahneman and Tversky (1986) Rational Choice and the Framing of Decisions. Which is a modern theory of decision making under risk  and uncertainty and also shows alternative descriptions of a decision problem often give rise to different preferences, contrary to the principle of invariance that underlies the rational theory of choice. The article introduced the idea of framing which is basically the same option just presented in different ways, and how this affects and can change people’s decisions. Specifically individuals who make inconsistent choices that usually depend on whether a question is framed in a way that suggests a win or lose scenario. Within the article it also introduces Prospect theory, which describes decisions between alternatives that involve risk i.e. where the probabilities of outcomes are known. The model is descriptive , and it tries to model real-life choices, rather than optimal decisions. During the article it looked at the different outcomes of framing and how something is portrayed that will affect the outcome and a person’s decision. The article also demonstrated the 4 principles of utility theory and looked at the failures of invariance (which was one of the 4 principles of utility theory). The conclusion from this was that violations of invariance are caused by framing effects i.e survival and death. Overall I found the article portrayed a good sense of rational choice in decision making. I felt that the example for the failures of invariance on lung cancer and different examples of treatments showed an accurate idea of how it is the way in which things are portrayed that can affect people’s decisions.