Framing Effects

Most people have two kinds of frames (positive and negative)

Positive frames contains cases about positive gain (profits, more saved lives etc..)

Negative frames contains cases about negative gain (financial loss, lost lives etc...)

Most people are inclined to choose the options which will result in some positive gains.

Example 1:

There are two stores A & B have the following prices for the same product.

Store A:
Pay using cash to get a discount.
Cash: 1 dollar
Card: 1.1 dollars

Store B:
Card payment will have a surchange.
Cash: 1 dollar
Card: 1.1 dollars

They have the exactly same price table, but most customers will choose Store A. Why?

The reason is: people don't like to pay extra money even the two plans are exactly the same.

If a person's first response is that he will have a "loss" instead of a "gain", he will choose the opposite plan.

Another Example:

If you are choosing a diet yogurt product and saw the following products:

Yogurt A: 5% fat.
Yogurt B: 95% non-fat.

Which one will you choose?

Most people will choose Yogurt B because "non-fat" will considered as "gain" and "fat" will be considered as "loss".

Quiz:
When a doctor tell his patient about the Survival rate of an operation, which way should he use?
1) The survival rate of the operation is 90%.
2) The death rate of the operation is 10%;

Loss Aversion

Example 2:

You are a doctor who have 30 patients.

There are two different treatment plans which can be used.

Plan A:
10 patients will be cured.

Plan B:
There is 1/3 possibility that it can cure all patients, and 2/3 possibility that no patients can be cured.

Which one you will choose?

Although the two plans have the same possibilities in math, most people will choose the plan A. They like the plans which can be certain to cure some people.

Let's try a slightly different story.

Plan A':
20 patients will die.

Plan B:
There is 1/3 possibility that it can cure all patients, and 2/3 possibility that no patients can be cured.

In this case, most people will be inclined to choose plan B because they don't want the result that some patients will die.

In a result, people are willing to choose some plans which can be said with certainty that they will bring them "gain".

When facing losses, they may try their best to choose plans to avoid them even those plans are more risky in math.

Prospect Theory

Example 3:

When you lose 10 dolloars, the degree of your grief increase 10 points. If you lose 20 dollars, the grief point won't be 20. It might be 17 or less.

However, if you lose 100 dollars twice and your total grief point might be 20 points.

In a result, twice of the gain won't bring twice of the happiness. twice of the loss won't give you twice of the grief.

Quiz:
1) If you have a group of good news to tell your friend, should you tell him altogether or one by one?
2) If you have a group of good news to tell your friend, should you tell him altogether or one by one?
3) If you have a big GOOD news and a small BAD news to tell your friend, should you tell him altogether or one by one?
4) If you have a big BAD news and a small GOOD news to tell your friend, should you tell him altogether or one by one?

Attributions:
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Music By:
Freepd.com
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Photo By:
Pixabay.com
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