The Relevance of Kahneman and Tversky's Concept of Framing to Organizational Behavior

Abstract

Recent research by Kahneman and Tversky (1979) has demonstrated that individual decisions are systematically affected by the way in which problems are presented. Specifically, individuals tend to be risk averse to problems framed in the positive direction (i.e., concerning gains) and to be risk seeking toward problems framed in the negative direction (i.e., concerning losses). This paper demonstrates that this concept of framing has wide explanatory power concerning a variety of concepts in organizational behavior and argues that the framing of experimental materials affects the formation of paradigms in organizational behavior. It is argued that many accepted findings may exist more because of the way researchers frame the problem than because of the presumed impact of the construct on individual behavior. Specific application is provided in the areas of (a) the escalation of commitment, (b) negotiator behavior, and (c) “the risky shift.”