The Psychology of Everyday Life: Motivation and the Search For Happiness

The Psychology of Money

What is the framing effect?

In the framing effect, the way that information is presented influences our response to it. In other words, whether the risk or the reward is highlighted drastically affects our own appraisal of risk and reward. In a 2006 study, Benedetto de Martino and his colleagues ran an experiment in which people were handed fifty dollars and then given two choices. Their first option was to keep twenty dollars. They were then offered a gamble with a chance of keeping or losing the whole fifty dollars. In this scenario, only 42 percent chose the gamble. When the same choices were framed in terms of loss instead of gain (subjects would lose thirty dollars rather than keep twenty dollars), 62 percent of the subjects took the gamble. Decisions were strongly influenced by the way that risks and rewards were framed. As we can imagine, advertisers are well aware of this tendency and put it to good use.


This is a web preview of the "The Handy Psychology Answer Book" app. Many features only work on your mobile device. If you like what you see, we hope you will consider buying. Get the App