Your Honour! You just got framed!
Updated: Jan 24, 2022
International arbitrators are conscious that differences in the quality of the lawyering and how the legal counsels present their stories can affect the final decision. Nevertheless, they might not be fully aware of how vulnerable they are to the 'framing technique', a subtle form of persuasion used by the legal counsels to present their stories in the most favorable light.
Being an avid fan of sporting metaphors, I always found it utterly fanciful to draw an analogy between the phenomena of the sporting and the legal arena. In line with this, I was delighted to learn that in baseball, framing is the art of a catcher strategically receiving a pitch close to the chest so that the pitch appears closer to the center of the strike zone, making it more likely for an umpire to call it a strike. This deceptive maneuver may alter the overall rate of called strikes within a game or inning.
Along the same lines, the scientific literature suggests that legal decision-makers (judges and arbitrators) may also be misled by the legal counsels' framing techniques similar to their sporting umpires. Developing an effective arbitration strategy that will make a panel of arbitrators enthusiastic about deciding in our favor depends largely upon framing an argument in a meaningful and motivational way. The words to express the story, its emphasized elements, and the order and manner in which the arbitration counsels present the story are crucial to persuading the tribunal to accept their version of the case.
The most known experimental design to demonstrate the underlying cognitive mechanism is when the same two sets of adjectives in a different order are used to describe two people:
John is described as „intelligent-industrious-impulsive-critical-stubborn-envious”, whereas
Adam is described as „envious-stubborn-critical-impulsive-industrious-intelligent.”
The empirical studies suggest that
the initial adjective influences the subjects' assessment of the later adjectives leading the subjects to view John as an able person with some shortcomings and Adam as a problem person whose abilities are hampered by severe difficulties.
The above finding has implications for the arbitration process since the legal counsels might choose specific words and order of words to express their story to persuade the arbitrators. However, the framing mechanism might work more subtly that goes way beyond the linguistic features of the words chosen by the counsels.
The so-called ’gain versus loss framing setting’ assumes that framing options can influence decisions.
When choosing between options that appear to gain relative to the status quo, people become risk avoiders, preferring a sure thing to a gamble. On the other hand, when choosing between options that seem like losses relative to the current state of affairs, people often make risk-seeking choices, rejecting a specific loss in favor of a gamble that might enable them to avoid losing anything at all. People find losses more aversive and unfair than equivalent gains attractive and fair.
The case-book example to illustrate the influence of gain versus loss framing is the following fictitious scenario: a company is making a small profit. It is located in a community experiencing a recession with substantial unemployment.
There was no inflation under the ’loss’ condition, but the company decreased wages by 7%.
Under the ’gain’ condition, there was substantial unemployment and inflation of 12% but the company decided to increase salaries by only 5%.
The researchers asked their subjects to evaluate the fairness of these options. Although the employees' actual income shifts were approximately the same, fairness judgments were strikingly different.
A wage cut was considered a loss and consequently judged unfair by the participants. On the other hand, a nominal raise that does not compensate for the inflation was more acceptable because it was considered a gain to the employees.
Empirical studies suggest that this pretty simple and not too subtle version of the framing setting influences novice and expert decision-makers, including judges.
Helm et al (2016) examined whether framing also influences the decisions of international arbitrators. The set of hypotheticals involved gain versus loss framing effects, which used a standard methodology to request a numerical price adjustment or a fairness adjustment.
The researchers used an international price renegotiation dispute scenario: two commercial entities (an outsourcer and a service provider) had a contract for IT-related services. The contract required periodic price adjustment but allowed pricing disputes to be resolved with arbitrators deciding ex aequo et bono, which requires decisions based upon fairness and equitable principles and is a well-known ground for decisions in international arbitration.
The arbitrators were randomly assigned to different conditions to explore the effect of framing.
In the loss version, the arbitrators learned that a group of prominent economists had predicted that the economic outlook was muted with an inflation rate of 0%. Under this condition, the outsourcer proposed to cut its payments to the service provider by 3%.
In the gain version, the arbitrators learned that a group of prominent economists had predicted that the economic outlook was bustling with an inflation rate of 5%. Under this condition, the outsourcer proposed to increase its payments to the service provider by 2%.
In both scenarios, the net economic impact to the service provider is a 3% difference in revenues. Having presented the arbitrators with one of these two basic substantive frames, the researchers asked two different questions requiring them to assess the dispute:
A randomly assigned group of arbitrators were asked to make a price adjustment.
A second randomly assigned group of arbitrators were asked to evaluate the relative fairness of the outsourcer's proposed price adjustment on a four-point scale (from "completely fair" to "very unfair").
The results suggested that the gain and loss frames affected the arbitrators' evaluations: when asked to make price adjustments, the arbitrators in the gain condition adjusted, on average, 4.44%, while those in the loss condition adjusted by an average of only 1.03%.
To conclude,
arbitrators in the gain condition
adjusted prices four times more than those in the loss condition.
Likewise, the researchers also used the same scenario to request fairness assessments. Rather than asking for a numerical decision, as international arbitration law sometimes requires arbitrator to make assessments based upon equitable principles, the arbitrators were asked to assess the fairness of the modification. The results suggested that framing affected arbitrators' fairness assessments, too.
Just like the baseball catchers subtly use the almost indiscernible art form of framing to deceive the umpires, legal counsels also use their skills to the best of their ability and present their stories in the most favorable light and in a manner most likely to have the psychological impact they desire. Considering the above, recognizing the psychological influence of framing should heighten the arbitrators’ ability to improve their decision-making and look beyond the manner and style of presentations to ascertain the actual story.
Cheat sheet for busy lawyers
Title
Are Arbitrators Human?
Authors
Rebecca K. Helm, Andrew J. Wistrich, and Jeffrey J. Rachlinski
Year of publication
2016
Theoretical / Conceptual framework
Framing mechanism in the international arbitration process. The researchers empirically tested if the international arbitrators are susceptible to the effects of framing.
Research question(s) / Hypotheses
The set of hypotheticals involved gain versus loss framing effects, which used a standard methodology to request a numerical price adjustment or a fairness adjustment.
Methodology
The researchers used an international price renegotiation dispute scenario. The arbitrators were randomly assigned to different conditions (gain condition vs loss condition) to explore the effect of framing. Having presented the arbitrators with one of these two basic substantive frames, the researchers asked two different questions requiring them to assess the dispute. A randomly assigned group of arbitrators were asked to make a price adjustment. A second randomly assigned group of arbitrators were asked to evaluate the relative fairness of the outsourcer's proposed price adjustment on a four-point scale (from "completely fair" to "very unfair").
Analysis / Results
The results suggested that the gain and loss frames affected the arbitrators' evaluations: when asked to make price adjustments, the arbitrators in the gain condition adjusted, on average, 4.44%, while those in the loss condition adjusted by an average of only 1.03%. To conclude, arbitrators in the gain condition adjusted prices four times more than those in the loss condition. The results suggested that framing affected arbitrators' fairness assessments, too.
