 Forbes recently published an article on how framing risks has impacted the perception of whether or not we should open the economy. From experience, I know that how information is presented matters as much as, or in some cases more than, the information itself. I wanted to know why this happens. Turns out it is due to a cognitive bias known as the framing effect. According to Wikipedia: The framing effect is a cognitive bias where people decide on options based on whether the options are presented with positive or negative connotations; e.g. as a loss or as a gain. The Framing of Decisions and the Psychology of Choice by Amos Tversky and Daniel Kahneman is considered the seminal study of this effect. In their study they demonstrated that people would reverse their preferences based on how a problem is framed. They presented the following scenario: Imagine that the U.S. is preparing for the outbreak of an unusual disease, which is expected to kill 600 people. Which of the two programs would you favor?
The majority of participants chose Treatment A. They then re-framed the options using negative language.
In this scenario the majority of people chose Treatment D. The outcome is the same in both scenarios, but participants changed their preference. Why did this happen? According to prospect theory we perceive a loss as more significant than a gain. When making decisions we will prefer assured gains over hypothetical gains, but hypothetical losses over sure losses. people have a tendency to engage in risk-taking behavior when they are presented with a negative frame and more likely to avoid risks in positive frames. Consider you are attempting to convince your company to take a risk. The chance of success is low, but the benefit is high if you do succeed. If you do nothing, you will experience a 5% loss in revenue.
How would you frame the problem to gain agreement to take the risk?
Because prospect theory tells us people are more likely to take on a risk to avoid negative outcomes than gain positive outcomes, the second presentation may be more convincing. Why does all of this matter? Most of our decision making is prone to bias. Understanding bias will help you communicate more effectively and avoid falling into traps yourself.
0 Comments
 Singapore will soo be leveraging wearable technology to supplement their approach to contract tracing after adoption of their mobile phone based app was too low to be effective. Experts say contact tracing devices need to be used by more than half a country's population to work. The TraceTogether app has only been adopted by 25% of Singapore's population, but government officials hope wearable tokens will be adopted by 75% of people. A wearable based approach to contact tracing could help in areas where feature phones are more prevalent and connectivity is unreliable. An open question is the communication channel for notifying individuals they may have been exposed in absence of a mobile device, but I'm curious to see how this solution works out..
What I like about this approach is the idea of removing friction by using a lower-tech solution. Implementing the latest technology is not always the best solution for your users. Design products that put the user first. Privacy concerns and perceptions around misuse of data are still barriers, but I'll be interested in following the adoption and efficacy of the solution in the coming months. References: https://www.businessinsider.com/singapore-rolls-out-wearable-tokens-contact-tracing-covid-19-spread-2020-6 https://9to5mac.com/2020/06/09/wearable-tag/ https://www.zdnet.com/article/singapore-looks-to-ease-privacy-fears-with-no-internet-wearable-device/ I had a recent conversation in a freelancing group about how to productize services. One of the questions was how to create a cost estimate given much of what we do is not well defined. To address this, I created a rough order of magnitude (ROM) estimation spreadsheet as a tool to quickly pull together an estimate. I know there are many templates and tools out there that do this, but I wanted to create something simple that took into account the need for contingency as well as provided an easy framework to capture scope. Let me know if you find this useful. YMMV You can view the Google Sheet here: docs.google.com/spreadsheets/d/1N02uHDAiLKoKiE8CJH6fpkQ1QfVOxw5jap_mPEqekl0/edit?usp=sharing   As a consultant I have the opportunity to work with a variety of companies and view how they execute from the outside in. When I get asked the question "Why are we failing?", the answer is often you do not have the right people in place that will thrive in the operational environment you've created. Does your company throw people into the deep end and expect people to sink or swim? Do you prioritize mentoring and growth from within? Is visibility just as, if not more important than output?
Companies need to be self-aware, acknowledge how things are done, and be realistic about their expectations. Work toward change, but ensure you have the right people in place to help get you reach your target. Understand that as companies expand and consolidate, your needs will change and you may have to look for a new kind of talent. Set yourself up for success by recognizing how your company operates and hiring people who thrive in that environment. A bad fit for one person is another person's dream. I personally love the sink or swim culture; it's why I am a consultant. Be honest about your expectations to find talent that will not only succeed, but thrive. |