Gains, Losses, and Judges: Framing and the Judiciary

Abstract

Losses hurt more than foregone gains—an asymmetry that psychologists call “loss aversion.” Losses cause more regret than foregone gains, and people struggle harder to avoid losses than to obtain equivalent gains. Loss aversion produces a variety of anomalous behaviors: people’s preferences depend upon the initial reference point (reference-dependent choice); people are overly focused on maintaining the status quo (status quo bias); people attach more value to goods they own than to identical goods that they do not (endowment effect); and people take excessive risks to avoid sure losses (risk seeking in the face of losses). These phenomena are so pervasive that legal scholars have assumed that they influence the development of law. Although numerous studies reveal that framing influences how ordinary people think about their rights, a clear demonstration that judges decide cases differently when the underlying facts present gains as opposed to losses does not exist. This Article fills that gap. We present eight studies with over one thousand judges as research participants that demonstrate that all four of these anomalous features of framing influence how sitting judges evaluate legal cases.

Keywords: law and psychology, judging, loss aversion, reference-dependent choice, status quo bias, endowment effect, risk seeking in the face of losses, framing effects, empirical