Think of answers to the following questions:
1. Would you rather have:
a) 99% pure drinking water or
b) Drinking water with 1% impurities
2. Would you rather have?
a) A bird-flu vaccine that is able to save 90% of the lives or
b) 10% of the population will die despite the bird-flu vaccine
3. Would you rather have:
a) Buy 1 + Get 1 free or
b) Buy 2 + Get 50 % off
In all these cases, most people would choose a) even though both options are equivalent. This psychological phenomenon is called “Framing Effect” whereby altering the structures of sentences can lead us to prefer one to another. Neuro-scientists think that there are sections in the brain responsible that help emotions overrule rational decisions leading to framing effects. This has lead many researchers to believe that some people may be more susceptible to framing effects than others. MRI scans on the brain reveal that these may be caused by a section of almond-shaped neurons called amygdalae.
Framing biases affect investing, lending, borrowing decisions and are used by advertisements to capture the attention of a potential consumer. They are used by politicians and economists to mask a snail-slow economy in seemingly robust terms. They are used by students to show off their achievements on the curriculum vitae. By Sainsburys to sell Orange juice and the 'Orange juice' to (mis-)communicate the amount of calories or sugar it has. You may call it a play on the numbers or the words, but it is a combination of amygdalae doing their work and firms maximizing profits.
Prospect theory in economics explains the framing effect by saying that people weigh losses more heavily than equivalent gains and this leads to a bias in favour of the 'positively-framed' statements. In our case, this would correspond to choices a on all the three questions. This revelation puts framing effects on the forefront of Behavioral Economics.
So next time you see John F. Kennedy's famous quote: “Ask not what your country can do for you, but ask, what you can do for your country,” think of framing effects!
For you I have the following question: On a sunny Sunday afternoon, you want to play cricket. So you go to Lillywhites and ask them for a bat and a ball. The salesman says, “The bat costs £1 more than the ball and they together cost £1.10.” Can you guess the price of the ball?
1. Would you rather have:
a) 99% pure drinking water or
b) Drinking water with 1% impurities
2. Would you rather have?
a) A bird-flu vaccine that is able to save 90% of the lives or
b) 10% of the population will die despite the bird-flu vaccine
3. Would you rather have:
a) Buy 1 + Get 1 free or
b) Buy 2 + Get 50 % off
In all these cases, most people would choose a) even though both options are equivalent. This psychological phenomenon is called “Framing Effect” whereby altering the structures of sentences can lead us to prefer one to another. Neuro-scientists think that there are sections in the brain responsible that help emotions overrule rational decisions leading to framing effects. This has lead many researchers to believe that some people may be more susceptible to framing effects than others. MRI scans on the brain reveal that these may be caused by a section of almond-shaped neurons called amygdalae.
Framing biases affect investing, lending, borrowing decisions and are used by advertisements to capture the attention of a potential consumer. They are used by politicians and economists to mask a snail-slow economy in seemingly robust terms. They are used by students to show off their achievements on the curriculum vitae. By Sainsburys to sell Orange juice and the 'Orange juice' to (mis-)communicate the amount of calories or sugar it has. You may call it a play on the numbers or the words, but it is a combination of amygdalae doing their work and firms maximizing profits.
Prospect theory in economics explains the framing effect by saying that people weigh losses more heavily than equivalent gains and this leads to a bias in favour of the 'positively-framed' statements. In our case, this would correspond to choices a on all the three questions. This revelation puts framing effects on the forefront of Behavioral Economics.
So next time you see John F. Kennedy's famous quote: “Ask not what your country can do for you, but ask, what you can do for your country,” think of framing effects!
For you I have the following question: On a sunny Sunday afternoon, you want to play cricket. So you go to Lillywhites and ask them for a bat and a ball. The salesman says, “The bat costs £1 more than the ball and they together cost £1.10.” Can you guess the price of the ball?
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