The purpose of this paper is to examine the harmful effects of framing and suggests ways to improve decisions.
The paper uses a number of real life examples of catastrophic failures of decision making by obviously intelligent and experienced people and compares them with less dramatic but common errors of judgement most people make. The way a problem is presented often determines the choices we make and that we are inconsistent. It explains this phenomenon using Kahneman and Tversky's Nobel Prize winning work in behavioural economics.
All human beings are susceptible to decision flaws from framing. It is possible to recognise signs of the way we may be framing a decision situation and adopt strategies to sidestep the hazards of wrong choice.
By adopting methods suggested in this paper, individuals can make better decisions in everyday life. Managers can make appropriate choices rather than take too little risk or too much. Organisations can train senior managers in decision strategies and adopt group processes that reduce the risk of flawed decisions.
The paper provides insight into errors all human beings are prone to, no matter how intelligent or experienced they are. Using everyday examples Indian managers are familiar with, the paper highlights the need to improve thinking.
