Nathan Novemsky

In the context of the burgeoning field of Behavioral Economics, "Framing" is how people perceive and communicate about reality. Your Frame is the mental picture you have of the world—and the paradigm through which you perceive reality. And although you might not consider Framing when coming upon a new idea, it encompasses all of your unconscious assumptions during decision-making.

Nathan Novemsky is a Professor of Marketing at Yale University’s School of Management—and an expert in the psychology of judgement and decision-making. He teaches Problem Framing, a course unique to the Yale School of Management, which provides managers with structures for maximizing their chances of making good long-term decisions—as well as understanding how natural psychological tendencies can derail optimal decision-making.

Below is an excerpt from Professor Novemsky’s Problem Framing course where he discusses how understanding our own biases can help us see problems more clearly:

We are literally set up to see changes. Think about how bright a light bulb is when you turn it on during the day, versus at night. It seems very bright at night—but doesn’t seem bright at all during the day. That’s a sensitivity to the relative brightness in the room. Our whole perceptual system has adapted to when the light gets low, and the same light that comes on feels much brighter. So this idea that change is relative to some reference point is very deeply rooted in our central nervous system—even in our simple senses. It also works in our higher level cognition and our decision making, for the same reason.

A perceptual example:

Center boxes

Are these two center boxes the same shade of gray?

What about when we take away the outer boxes?
 

...
 

... scroll down...
 

...
 

... scroll some more...
 

...


Here it comes...

 

...



 How about now? Do they still look different?
 

Optical illusion, part 2

Notice as you see these two things look different, you’re not thinking, “Oh, this is darker because it’s in a light background—or oh, this is lighter because it’s in a dark background.”

That’s not our experience at all. Our experience is, “Here’s a dark square. Here’s a light square.”

But of course, our eyes must take into account what’s around the box for us to see these things. And so we use reference points—sometimes literal physical reference points—but also in decision-making, psychological reference points—without knowing it.


It’s just part of how we read problems, how we think about problems, and how we frame situations. We bring into the context some reference point, and once that reference point is there, it works on our perceptions—but we don’t feel it working. We’re not aware of the reference dependence of all of our perceptions, and all of our choices. But it’s there.


Want to learn more from Professor Novemsky? Check out this video of one of his Problem Framing classes about risk aversion in decision making:


Interested in learning more?

1.5-Day Yale Behavioral Economics Summit

On Wednesday-Thursday, October 21-22, the Yale Center for Customer Insights (YCCI) is partnering with McKinsey & Co. to hold a 1.5-day fast-paced curriculum highlighting the latest theories and research about Behavioral Economics in New York City. 

Developed and taught by Yale's world-class Behavioral Economics faculty, the Summit will explore the factors that shape spending, how shifting consumer mindsets influence behavior, and hor to design strategies tailored for your business needs.

Ideas To Go clients receive a discount of $300 off the regular rate—simply enter “ITG_Rate” into the discount field on the registration page. (Note: Discount cannot be combined with any other special rate.)


Ed Harrington is CEO and Innovation Process Facilitator at Ideas To Go, an innovation agency that works with Fortune 500 companies in ideation and concept development to incorporate the voice of the consumer.

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Ed Harrington

Ed Harrington is CEO and Innovation Process Facilitator at Ideas To Go, an innovation agency that works with Fortune 500 companies to incorporate the voice of the consumer in ideation and concept development. He co-authored the book, "Outsmart Your Instincts: How the Behavioral Innovation Approach Drives Your Company Forward."