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The Truth About Negotiations by Leigh Thompson

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Truth 38The framing effect

Which would you rather have?

A. $10,000 for sureorB. A 50-50 chance of winning $20,000 or nothing

This tantalizing proposition is an approach-approach conflict because both options are pretty attractive. (We'd like both of them!) However, we have a little bit of an internal conflict in choosing because as much as we would like to get $20,000, there is a 50 percent chance that we would walk away with nothing. When most people are given the A or B choice, the large majority choose A. (About 85 percent of the students in my MBA and executive courses would rather have $10,000 for sure than a 50-50 chance of winning twice as much money.)

This phenomenon illustrates a basic tenet of human behavior, called risk aversion

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