Suzie Desouza, the Manager of Industrial Relations at Zeta Manufacturing, has just come from a ten-hour marathon meeting with the union negotiators who represent the workers in the assembly plant.The union leaders have tabled their final offer and are threatening to call a strike if management does not accept it.Suzie now has to meet with her boss, Gordon Wong, and brief him on the union's final offer.Suzie is hopeful that Gordon will accept the union's terms, but she is not sure how to frame the cost arguments in order to achieve this objective.In her meeting with Gordon the next morning she summarizes the impact of the union's offer as follows: If we accept their offer, it will cost us an extra $10 million over the next three years.However, if we reject their offer, there's a 50 percent chance that it will cost us more than $10 million, perhaps as much as $20 million; but also a 50 percent chance that it will cost us less, perhaps much less. Do you think Gordon will accept or reject the union's offer? Use your knowledge of framing bias to explain why.

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Heather Aiello · Accepted Answer

Final Answer : According to the findings of Kahneman and Tversky cited in the text, Gordon will most likely reject the union offer because it has been framed as a choice between two losses.To improve her chances of getting Gordon's approval, she might try framing the union's offer in terms of gains, as follows: If we accept this offer, it could save as much as $10 million over three years; if we reject this offer and engage in protracted negotiations, there is a 50 percent chance that we will save more than $10 million.

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