What is narrow framing?
Daniel Kahneman's Thinking, Fast and Slow says people are narrow framers by nature. The research behind it shows what that costs: a combination of choices that loses to another in every outcome.
Answer to the question
What is narrow framing?
Narrow framing is deciding about one choice at a time, in isolation from the other choices you face. Kahneman and Lovallo (1993) named it. In Tversky and Kahneman's paired decisions it leads most people to a combination that another available combination beats in every outcome.
Key takeaways
- Kahneman and Lovallo (1993) named narrow decision frames: people consider problems one at a time, isolated from other pending choices and from future chances to make similar ones.
- Kahneman (2011) reports that 73 per cent chose A and D and 3 per cent chose B and C, although B and C pay $10 more than A and D in both branches.
- Rabin and Weizsacker (2009) found 28 per cent of participants chose dominated combinations in a real-stakes laboratory replication of Tversky and Kahneman (1981).
- Thaler, Tversky, Kahneman and Schwartz (1997) report that investors who looked at results least often accepted more risk, and those who looked most often took the least risk and earned the least.
- Kahneman's book gives three limits on the broad-frame mantra: independent gambles, losses that do not threaten total wealth, and no long shots.
Most people who face two small decisions at once pick a combination that the pair they turned down beats, by the same margin whichever way the gamble falls. In the original experiment, the book says, nearly three in four did. Narrow framing is the name for how it happens: judging each choice alone, as though it were the only one of its kind you will ever make.
In Thinking, Fast and Slow, Daniel Kahneman sets narrow framing against broad framing, in which a choice is placed among the others like it and handled as one set. The book calls Humans narrow framers by nature, and a whole chapter is about what that habit costs. The cost can be counted in dollars, as the sections below do.
Why Does One Bet Feel Different From a Hundred?
The book tells of the economist Paul Samuelson offering a friend a coin toss: lose $100 on one side, win $200 on the other. The friend declined, saying he would feel the $100 loss more than the $200 gain. Then he added that he would take the bet if Samuelson let him make 100 such bets.
Judging each risk one at a time costs more than adopting a single policy for all of them.
Samuelson went on to prove that a person who maximises expected utility and rejects one such gamble should reject the offer of many. Matthew Rabin and Richard Thaler, the book reports, pointed out how odd that conclusion is. Taken together, the hundred bets have an expected return of $5,000, a 1 in 2,300 chance of losing any money and a 1 in 62,000 chance of losing more than $1,000. The friend gave two answers about the same coin, and they differ only in the length of the frame around it. The single bet was judged narrowly and the hundred broadly.
The book gives a second way into the puzzle through a character called Sam, who counts every loss twice. For Sam a single toss is worth nothing, because the $200 win and the doubled sting of the $100 loss cancel out. Offer two tosses and the package is worth $50. Offer three and it is worth $112.50, so the third toss, worthless on its own, has added $62.50 to the value of the package. With five tosses the expected return is $250, the chance of losing anything is 18.75 per cent, and Sam's cash equivalent is $203.125. The more tosses are bundled, the less the loss weighs, and no single toss ever changed.
Where the Term Comes From
Kahneman and Dan Lovallo named narrow framing in a 1993 paper in Management Science, on timid choices and bold forecasts. Its third generalisation concerns narrow decision frames. People, it says, tend to consider decision problems one at a time, isolating the current problem from other choices that may be pending and from future opportunities to make similar decisions. The paper calls the resulting mistakes isolation errors.
The argument is theoretical: it builds on earlier experiments and reports no new one of its own. The paper is also cited in Why the Planning Fallacy Persists, where the forecasting half of its title is the subject. It also leans on Samuelson's observation that people who refuse one play of a favourable gamble will accept a run of them, the same problem the first section describes.
The demonstration behind it is older and belongs to Amos Tversky and Kahneman. Their 1981 paper in Science on the framing of decisions and the psychology of choice is the source of the pair of decisions described next.
A separate literature uses another word for the same split. Daniel Read, George Loewenstein and Matthew Rabin wrote in 1999 about choice bracketing, where choices made in isolation are bracketed narrowly and choices made together are bracketed broadly.
Which of Two Pairs of Choices Wins?
Two decisions are put side by side. In the first, people choose between A, a sure gain of $240, and B, a 25 per cent chance to win $1,000 with a 75 per cent chance of nothing. In the second, they choose between C, a sure loss of $750, and D, a 75 per cent chance to lose $1,000 with a 25 per cent chance of losing nothing.
Most people take the sure thing when gains are on offer and the gamble when losses are. In the original experiment, the book says, 73 per cent chose A and D, and 3 per cent chose B and C.
Add the choices up, which is what a broad frame does. A and D together give a 25 per cent chance to win $240 and a 75 per cent chance to lose $760. B and C together give a 25 per cent chance to win $250 and a 75 per cent chance to lose $750. The rejected pair is $10 better whichever way the gamble falls. Each answer looks reasonable alone, and the narrow framing of the two problems is what loses the money.
The rejected pair is $10 better whichever way the gamble falls.
The book's own wording is plain. Narrow framing is a sequence of two simple decisions, considered separately. Broad framing is a single comprehensive decision with four options, A and C, A and D, B and C, or B and D. It adds that the broad frame is superior in every case in which several decisions are to be contemplated together. The count grows quickly: five simple binary decisions considered together become one choice among 32 options, which is a reason the narrow frame is the easier one to live in.
What Happens When People Look More Often?
An experimental test by Richard Thaler, Amos Tversky, Daniel Kahneman and Alan Schwartz, published in 1997 in the Quarterly Journal of Economics, put the same logic on a clock. The authors' abstract reports two predictions tested in an experiment on learning from experience. Investors who evaluate their investments less often should accept more risk, and removing losses by raising all payoffs should also increase risk taking. Both were supported. The investors who received the most frequent feedback took the least risk and earned the least money.
The title names the two ingredients, myopia and loss aversion. A run of results reviewed one at a time is a run of narrow frames, each one open to showing a loss, and in the friend's case a single toss was the frame. Seeing the hundred tosses as one sum is the broad frame, and the experiment suggests that how often results are shown can decide whether narrow framing takes hold.
How Common Is the Dominated Choice?
Matthew Rabin and Georg Weizsäcker showed in 2009 that a person who evaluates decisions separately will sometimes choose an option that another available option beats in every outcome. Economists call that option stochastically dominated, and the result holds unless their risk preferences are of one particular kind, constant absolute risk aversion, and it holds even for a simple pair of independent binary decisions. In the American Economic Review, they report a real-stakes laboratory experiment replicating Tversky and Kahneman (1981), in which 28 per cent of participants chose dominated combinations.
A representative survey of hypothetical large-stakes choices produced higher rates. That survey records what people say they would choose, and the laboratory records what they chose with money on the table. Violation rates varied little with personal characteristics. From average preferences that look prospect-theoretic, the authors estimate that 89 per cent of people bracket narrowly, which is a model-based estimate and not a count of anyone's choices. Real money produced the lower of the two rates the authors report, and 28 per cent is still more than one participant in four.
What Does a Broad Frame Look Like in Practice?
The book treats broad framing as what a rational agent does and narrow framing as what people do. Kahneman puts it that a rational agent will of course frame broadly, while Humans frame narrowly by nature. His name for a routinely applied broad frame is a risk policy. His examples are always taking the highest possible deductible on insurance and never buying extended warranties. A person who has the policy does not build a fresh preference every time the choice arrives. The book pairs it with the outside view from the planning chapters, so a forecast and a gamble are both set among their reference class, as in Why the Planning Fallacy Persists.
The same frame explains habits that look unrelated to gambling. The book calls [mental accounts](https://thewhyweproject.com/articles/what-is-mental-accounting) a form of narrow framing, which is the thread running through Mental Accounting and the Easy Money. It calls the disposition effect, selling winners and holding losers, an instance of narrow framing as well. And a spend only looks like a reason to continue when it is sealed off from what else the time could buy, which is the story told in Why You Finish the Series You Stopped Enjoying.
The next chapter supplies the feelings that keep the narrow frame in place even when the broad one has been shown: sunk costs, regret and responsibility. The chapter ends without a ruling. Regret is real, the book's rational agents do not feel it, and Kahneman declines to say simply that people should ignore it.
The same chapter also describes a study in which students were told either to make each gamble as if it were the only one, or to imagine themselves as traders who make such calls all the time and treat each as part of a portfolio, with skin conductance measured as the emotional response. The book gives its own mantra, that you win some and lose some, and three limits on it. It works only when the gambles are genuinely independent, so it fails for several investments in one industry that would go bad together. It works only when a possible loss does not threaten your total wealth. It should not be applied to long shots.
Common questions
What is narrow framing?
Narrow framing is deciding about one choice at a time, in isolation from the other choices you face or will face. Kahneman and Lovallo (1993) named it, and Tversky and Kahneman's paired decisions show its cost: most people choose a combination that a rejected combination beats whichever way the gamble falls.
Is narrow framing the same as the framing effect?
No. The framing effect is that different descriptions of the same options change what people choose, which Tversky and Kahneman (1981) documented. Narrow framing concerns scope: how many decisions are inside the frame. The two meet in the paired decisions, which come from the 1981 paper, but they are separate claims.
Does narrow framing always lead to a worse choice?
Not necessarily. The damage shows up when several decisions are bundled together, as in the A, B, C and D pair, where one combination loses to another. The book also lists three conditions under which its broad-frame mantra of winning some and losing some should not be applied.
Who gets the credit for the idea?
Three sets of authors, for three parts. Kahneman and Lovallo (1993) named narrow framing. Tversky and Kahneman (1981) demonstrated the underlying isolation with the paired decisions. Read, Loewenstein and Rabin (1999) supplied the bracketing vocabulary, and the first author of that paper is Daniel Read.
Sources
Kahneman, D. (2011). Thinking, Fast and Slow. New York: Farrar, Straus and Giroux. Seed book; vault hub Books/Thinking Fast and Slow.
Kahneman, D., & Lovallo, D. (1993). “Timid choices and bold forecasts: A cognitive perspective on risk taking.” Management Science, 39(1), 17-31. doi:10.1287/mnsc.39.1.17 https://doi.org/10.1287/mnsc.39.1.17
Tversky, A., & Kahneman, D. (1981). “The framing of decisions and the psychology of choice.” Science, 211(4481), 453-458. doi:10.1126/science.7455683 https://doi.org/10.1126/science.7455683
Thaler, R. H., Tversky, A., Kahneman, D., & Schwartz, A. (1997). “The effect of myopia and loss aversion on risk taking: An experimental test.” Quarterly Journal of Economics, 112(2), 647-661. doi:10.1162/003355397555226 https://doi.org/10.1162/003355397555226
Rabin, M., & Weizsäcker, G. (2009). “Narrow bracketing and dominated choices.” American Economic Review, 99(4), 1508-1543. doi:10.1257/aer.99.4.1508 https://doi.org/10.1257/aer.99.4.1508
Read, D., Loewenstein, G., & Rabin, M. (1999). “Choice bracketing.” Journal of Risk and Uncertainty, 19(1-3), 171-197. doi:10.1023/A:1007879411489 https://doi.org/10.1023/A:1007879411489