Wednesday, February 10, 2016

Influencing Behavior through Framing

In his book Misbehaving: The Making of Behavioral Economics, the author Richard Thaler highlights an incident early in his teaching career when he gave an extremely tough test to his students. The average score for the test was 72/100 which resulted in a huge uproar by his students.

To find a solution to this problem, instead of making the test easier he made the test harder but he increased the maximum score to 137. The average score was 96/137 which was 70% lower than the earlier average of 72%. However, the students were delighted with the absolute score of 96.

This technique is also used by Marketers called Framing. The framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on how it is presented; e.g. as a loss or as a gain.

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