Tel. (01865) 271060
Fax. (01865) 271094
EMail michael.bacharach@economics.ox.ac.uk
Duration of Research
July 1994 - December 1996
In general, a person deciding on a strategy for dealing with a given situation inevitably focuses on certain features of the situation and not others. For example, the perceived fairness of a wage offer may depend on whether one focuses on how it compares with wages in similar jobs, or how it relates to productivity gains; a credit card surcharge may appear more acceptable if it is perceived as a cash discount; and so on. These alternative ways of interpreting situations are called frames, and their effects on decision-making are called framing effects. Often there are rational grounds for identifying the relevant features. Sometimes, however, people have to make choices when they simply do not have the information or expertise to know what features should be considered. For example, we may only discover that we chose the wrong surgeon for an operation after it is too late to change our minds. This problem has practical implications and also throws light on some of the most difficult issues in the economic theory of rational choice.
The project seeks to examine various aspects of frame selection and the effects of framing in difficult or ambiguous circumstances. It uses experiments to isolate the key features of such choices and operates at a more abstract and theoretical level than many of the projects in the programme.
The research includes four linked experiments focused on the question of how people select relevant features of situations - as it were, "cut up the world" - when there is no obviously agreed or sensible way to do so. The first examines the co-ordination of choice - what characteristics of a situation do people seize on in making a choice when they know that they will be rewarded if someone later chooses the same way as they did? The second takes the argument one stage further by introducing people with different characteristics (for example: nationality, ethnicity, gender, social class) to see whether these factors make a difference to the capacity to co-ordinate choices. The third takes up an even commoner kind of situation in everyday life by examining choices between alternatives that differ according to multiple criteria - for example ranking applicants with different strengths and weaknesses. The object is to see what strategies people use to resolve the problems that arise when no single alternative is best according to all of the relevant criteria, and how these strategies vary with people's backgrounds. The fourth experiment examines how people seek to discriminate between different goods offered to them when they are not in a position to make a reasoned judgement. This is analogous to the common problem of consumer choice which arises when we are unable to evaluate the different claims of, for example, different petrol companies over fuel additives, or dentists over the quality of service they offer, but are forced, for practical reasons, to make a choice.
The research has important implications for theoretical developments in economics and psychology, since it deals with an area at the boundaries of the traditional theory of rational choice. It also has practical implications for the way a wide variety of goods and services are marketed to consumers and for the ways people present themselves when they are competing with others for employment, and for the ways people make choices between alternatives with many criss-crossing advantages and disadvantages.
MICHAEL BACHARACH is a Lecturer in Economics and Fellow of Christ Church College, Oxford. He has carried out a large number of research projects and written extensively on rational decision-making and the reasoning and behaviour of real decision-makers in economic interactions.
DIEGO GAMBETTA is Reader in Sociology and Fellow of St. Anne's College, Oxford. He has researched and written extensively on problems of economic decision-making and on trust, including The Sicilian Mafia: The Business of Private Protection, (Harvard University Press, 1993).
ANDREW M. COLMAN is Reader in Psychology at the University of Leicester. The second edition of his book Game Theory and Its Implications: Strategic Interaction in the Social and Biological Sciences is due to appear shortly.
OTHER RESEARCHERS:
Dale Stahl, Professor of Economics, University of Texas at Austin.
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