Cognitive Biases and Their Impact - 21 (Framing Effect)

Daniel Kahneman and Amos Tversky pioneered the concept of the framing effect in the 1970s and early 1980s. Their research, which led to the formulation of Prospect Theory, highlighted how people make decisions involving risk and uncertainty. They demonstrated that the way choices are framed-as losses or gains-can significantly influence the decisions people make, even if the outcomes are quantitatively equivalent. Definition of the Framing Effect: The Framing Effect refers to a cognitive bias in which people's choices are significantly influenced by how information is presented rather than solely by the information itself. This effect underscores the importance of phrasing, context, or the emotional setting in which data is conveyed, demonstrating that the format of presentation can alter decisions dramatically. This phenomenon is critical in understanding how individuals and groups can arrive at different conclusions or actions based on the same factual content, simply framed in v...