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Questioning Utility Theory
Utility theory postulates that it should not matter how alternatives are presented. Once we know what's at stake, and the risks involved, we should have enough awareness of ourselves to make the choice that serves us best.
In fact, psychologists Daniel Kahneman of Princeton and the late Amos Tversky of Stanford demonstrated that the way alternatives are framed can make quite a difference in our choices. In one of their most famous studies, they presented people with a choice between two programs that addressed a public health threat to the lives of 600 people. When the outcomes of the programs were described as (a) saving 200 lives for sure, or (b) a one-third chance to save 600 lives and a two-thirds chance to save no one, most respondents preferred the first option. But when the outcomes were presented as (a) 400 people dying for sure, or (b) a two-thirds chance of 600 people dying and a one-third chance that no one would die, most respondents preferred the second option. Of course, the two versions of the problem are the same, because the people who will be saved in one version are the same people who will not die in the other. What happens here is that people are generally risk-averse in choices between sure gains and favorable gambles, and generally risk-seeking in choices between sure losses and unfavorable gambles. "Some propensities," points out former NSF Program Director Jonathan Leland, "are so ingrained that the trick is to help people understand why their decisions are bad." No one, it seems, is immune to the power of the well-chosen word.
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