framing

The Behavioral Economics of Price-Setting
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The Behavioral Economics of Price-Setting

Business & Management, Marketing & Consumer Behavior

The Behavioral Economics of Price-Setting

Prospect theory proposes that when making decisions people use a reference point to frame prospective alternative outcomes as either potential gains or losses; when considering prospective gains, they are risk-averse and prefer certainty, but when considering prospective losses, they are risk-prone and prefer to risk the possibility of larger but uncertain losses. However, when setting prices people make decisions that contradict prospect theory: they are risk prone when cutting prices with the prospect of revenue gains, and risk averse when raising prices that they associate with perceived revenue losses.

By Gerald Smith|2022-02-17T05:21:38+00:00December 7th, 2021|Categories: Business & Management, Marketing & Consumer Behavior|Tags: availability heuristic, bias, framing, loss aversion, management, marketing, pricing, prospect theory, salience|

Tell Me Why! Explanations for Ambiguity in Health Decision Making Affect Treatment Choice
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Tell Me Why! Explanations for Ambiguity in Health Decision Making Affect Treatment Choice

Behavioral Theory & Insights, Health & Medicine

Tell Me Why! Explanations for Ambiguity in Health Decision Making Affect Treatment Choice

Medical treatment decisions are often rife with ambiguity. Exact probabilities for things like side effects or treatment success rates are frequently unknown. But why is this important? Because decision making research has shown that ambiguity can systematically alter the choices people make. We investigated how providing different explanations for the ambiguity in a treatment decision context affected willingness to adopt a treatment with an ambiguously described success rate. When the explanations involved elements that the person was knowledgeable about or could control, people were more interested in an ambiguous treatment.

By Jillian O’Rourke Stuart|2022-05-26T06:59:13+00:00August 30th, 2021|Categories: Behavioral Theory & Insights, Health & Medicine|Tags: ambiguity aversion, communication, decision making, framing, personal health, public health, salience, treatment choice|

Biased by Design? Motivated Reasoning by Politicians vs. the Public
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Biased by Design? Motivated Reasoning by Politicians vs. the Public

Government & Civic Behavior, Morality & Prosocial Behavior

Biased by Design? Motivated Reasoning by Politicians vs. the Public

Governments around the world proclaim their interest in evidence-based policymaking. However, before evidence can affect policies, it needs to be used by human decision-makers. New research shows that politicians, like their voters, are subject to psychological biases, leading them to misinterpret policy information if it challenges their existing attitudes and beliefs. Moreover, they are more resistant to efforts to reduce those biases, and more likely to double down on their political beliefs even when at odds with the evidence at hand.

By Julian Christensen|2022-02-17T05:31:28+00:00February 2nd, 2021|Categories: Government & Civic Behavior, Morality & Prosocial Behavior|Tags: bias, debiasing, framing, motivated reasoning, motivation, politics|

Behavioral Insights for Old Age Planning
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Behavioral Insights for Old Age Planning

Behavioral Theory & Insights, Finance & Investing, Society & Everyday Life

Behavioral Insights for Old Age Planning

It’s almost impossible to rationally plan old age, given that decisions in this domain are complex, jointly made and emotional. I argue that behavioral economics can help us understand some of our common decision-making barriers, such as dealing with decision avoidance, reframing old age positively, and designing interventions to better forecast our needs in old age.

By Joan Costa-Font|2022-02-17T06:06:18+00:00March 4th, 2020|Categories: Behavioral Theory & Insights, Finance & Investing, Society & Everyday Life|Tags: ageing, auto enrollment, behavior change, community, framing, incentives, insurance, narratives, nudge, pension, planning, retirement, social identity|

The Secrecy Effect
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The Secrecy Effect

Marketing & Consumer Behavior

The Secrecy Effect

Advertisers often depict their products being consumed in a social setting, but increasingly they also depict people secretly consuming their products. Will consumers like a product more if they are prompted to consume it in secret? New research explores this question, finding that prompting women to think about consuming products in secret has an impact, not only on product evaluations, but also on behavior and willingness to pay for those products. The authors refer to this effect as the “secrecy effect.”

By Maria Rodas|2022-02-17T06:11:05+00:00November 25th, 2019|Categories: Marketing & Consumer Behavior|Tags: attitude polarization, attitudes, behavior, branding, consumers, consumption, fmcg, framing, marketing, secrecy|

The ‘Interpersonal Gambler’s Fallacy’: When Similarity Backfires
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The ‘Interpersonal Gambler’s Fallacy’: When Similarity Backfires

Finance & Investing, Marketing & Consumer Behavior, Society & Everyday Life

The ‘Interpersonal Gambler’s Fallacy’: When Similarity Backfires

New research shows that being similar to a previous winner can have radically different effects on people’s participation likelihood in sweepstakes – it all depends on the attributions people make for the winning outcome.

By Alain Samson|2022-02-17T06:24:28+00:00May 28th, 2018|Categories: Finance & Investing, Marketing & Consumer Behavior, Society & Everyday Life|Tags: behavioral economics, behavioral finance, consumer behavior, decision making, framing, gambler's fallacy, gambling, heuristic, hot hand fallacy, lotteries, social psychology, sweepstakes|

Why Talking Calories Defeats the Point of Nudging
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Why Talking Calories Defeats the Point of Nudging

Health & Medicine, Marketing & Consumer Behavior

Why Talking Calories Defeats the Point of Nudging

A frequent misconception we hold is believing that what makes food healthy or unhealthy is the number of calories it contains. We know that soda is unhealthy and has a lot of calories and that chamomile infusion is healthy and does not have a lot of calories.

By Laura Mneimneh|2022-02-17T06:24:48+00:00April 14th, 2018|Categories: Health & Medicine, Marketing & Consumer Behavior|Tags: decision making, food labeling, framing, nudge, nutrition, public health|

Myopic Loss Aversion: A Behavioral Answer to the Equity Premium Puzzle?
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Myopic Loss Aversion: A Behavioral Answer to the Equity Premium Puzzle?

Finance & Investing

Myopic Loss Aversion: A Behavioral Answer to the Equity Premium Puzzle?

Stocks yield much higher returns than bonds and other riskless securities. In fact, in the last 100 years US equities have seen an 8% average annual real return, compared to only a 1% return for more riskless securities. This gap is called the equity premium puzzle – why are equities valued so much higher than securities? One behavioral theory attributes the equity premium puzzle to what’s known as myopic loss aversion (MLA) – the idea that loss-averse investors (as all investors are) take too short-term a view of their investments, leading them to react overly negatively to short-term losses. We designed the first natural field experimental evidence to show that MLA exists for professional traders.

By Robert Metcalfe|2022-02-17T06:43:11+00:00April 7th, 2017|Categories: Finance & Investing|Tags: behavioral economics, behavioral finance, decision making, framing, information, investing, loss aversion, markets, risk, uncertainty|

A Nudge in the Green Direction
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A Nudge in the Green Direction

Environment, Energy & Transportation, Marketing & Consumer Behavior

A Nudge in the Green Direction

Despite good intentions, environmentally friendly attitudes do not always translate into corresponding food choices (the so-called intention-behavior gap). To investigate the potential benefits of behavioral nudges, the Flemish government’s Environmental, Nature and Energy Department, together with its partners, conducted tests in several retail locations. The results of our research are reported in this post.