Framing the Options: Praying while Smoking, and Fighting Pandemics: By framing options for people in particular ways, we can sometimes get them to choose what we’d like them to choose. One such instance is when tastes are reference based.

A: When first introducing the topic of “framing”, we sometimes tell the story of two priests who wanted their bishop’s permission to smoke while praying. The first asked the bishop if it would be permissible for him to smoke when praying. The second asked for permission if, during those moments of weakness when he smokes, it might be permissible for him to say a prayer.

(a) The bishop said “definitely not” to one of the priests and “of course, my son” to the other. Can you guess which priest got which answer?

(b) How can reference-based preferences on the part of the bishop explain the different responses to what amounts to the same question as to whether or not one can smoke during prayer?

B: Suppose that a local outbreak of a rare disease will, unless something is done, result in 600 deaths. There are two mutually exclusive emergency plans that can be put into place. Under plan A, 200 people will be saved, while under plan B, there is a one third chance that all 600 people will be saved and a two thirds chance that none of them will be saved. When presented with this choice, an over whelming majority of people choose A over B.

(a) Do people exhibit risk aversion or risk-seeking preferences when making this choice?

(b) There is a different way to frame the same two programs: Under plan C, 400 people will die, and under plane D, there is a one third chance that no one will die and a two thirds chance that 600 people will die. Explain how options A and C are identical and how options B and D are identical.