Beh Econ Update: The Framing Effect

Would your choice (or answer) be impacted by the way a particular question was framed?

Econs, to use a word coined by Richard Thaler, would scoff at such a notion. Reality, of course, indicates otherwise. Should a price be framed as a discount during a sale, should it be offered at a premium for the rest of the year? Should an insurance firm advertise how dangerous a disease is or how effective the treatment is? And should a hospital take the opposite route?

Again, in the world of the Econ, each of these questions do not matter, one’s answer should change. Work done over years, and the intuition of all us Humans indicate that it does matter. That, in a nutshell, is the framing effect.

And where the second case study I spoke of yesterday is concerned: I’ll just outsource the job to Dan Ariely.

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