People don’t always make rational decisions. Contrary to economics’ model of homo economicus, the value optimizing being, we humans systematically make errors in judgment.
One such error is caused by framing.
Imagine there is a small island of 600 people and there is a deadly disease on its way.
You have two choices:
A. Definitely save 200 lives
B. 1/3 chance of saving 600 people, 2/3 chance of saving no one
One group of people gets shown choices A and B. The other group of people is shown the following choices:
C. 400 people definitely die
D. 1/3 chance no one dies and 2/3 chance everyone dies
When choosing between choices A and B, nearly everyone chooses to definitely save 200 lives. But when choosing between C and D, nearly everyone chooses the gamble, hoping to save everyone.
When framed as a loss, we choose differently than when the choice is framed as a gain. Fundamentally, every option is the same and if people were rational and randomly distributed between groups, we wouldn’t observe significant differences in choices.
People are eager to jump on a sure gain and willing to gamble on a potential loss.