<p>The following is a slight rewording of an example in Richard Thaler's <em>Misbehaving</em> (1):</p>

<blockquote>
  <p><strong>Positive framing of certain outcome</strong></p>
  
  <blockquote>
    <p>Imagine you are $300 richer than you are today.  You are given a choice between:</p>
    
    <blockquote>
      <p>A. A certain gain of \$100.</p>
      
      <p>B. A 50% chance to gain \$200 and a 50% chance of losing \$0.</p>
    </blockquote>
  </blockquote>
  
  <p><strong>Negative framing of certain outcome</strong></p>
  
  <blockquote>
    <p>Imagine you are $500 richer than you are today.  You are given a choice between:</p>
    
    <blockquote>
      <p>A. A certain loss of \$100.</p>
      
      <p>B. A 50% chance of losing \$200 and a 50% chance of losing \$0.</p>
    </blockquote>
  </blockquote>
</blockquote>

<p>It can be seen that, under either framing, choice A implies \$400 richer than today while choice B implies a 50% chance of \$500 richer and a 50% chance of \$300 richer.  According to Thaler, however, 72% of subjects chose A when presented with the positive framing and only 36% chose it when presented with the negative framing.</p>

<p>To modify this to fit the terms of your question, the initial figures in both framings could be reduced by \$300. The second would then become "Imagine you are \$200 richer ...".  The first would no longer require any imagining.  My (untested) intuition, however, is that the inclusion of imagining in one framing but not in the other might influence people's responses in some way that Thaler's formulation avoids.</p>

<p>I therefore suggest instead the following, because it retains the symmetry of imagining in both framings:</p>

<blockquote>
  <p><strong>Positive framing of certain outcome</strong></p>
  
  <blockquote>
    <p>Imagine you are \$50 richer than you are today.  You are given a choice between:</p>
    
    <blockquote>
      <p>A. A certain gain of \$50.</p>
      
      <p>B. A 50% chance to gain \$150 and a 50% chance to lose \$50.</p>
    </blockquote>
  </blockquote>
  
  <p><strong>Negative framing of certain outcome</strong></p>
  
  <blockquote>
    <p>Imagine you are \$150 richer than you are today.  You are given a choice between:</p>
    
    <blockquote>
      <p>A. A certain loss of \$50.</p>
      
      <p>B. A 50% chance to gain \$50 and a 50% chance to lose \$150.</p>
    </blockquote>
  </blockquote>
</blockquote>

<p>Reference</p>

<p>(1) Thaler R (2015) <em>Misbehaving: the Making of Behavioural Economics</em>, republished by Penguin Random House UK in 2016, p 33.</p>

CC BY-SA 4.0
2019-09-14T05:41:55.800Z
When I was an exchange student in UEA(Norwich, UK) I think the question on positive framing did not require any imagination. I was still inconsistent as most students were.
George Ntoulos
CC BY-SA 4.0
2019-09-13T23:05:03.390Z
2019-09-15T12:44:14.707Z
2019-09-15T12:44:14.707Z
Adam Bailey
<p>I am an economics' graduate seeking to study Law and I want to illustrate the importance of legal certainty. Penalties, Costs are negativelly framed.</p>

<p>I am trying to word.</p>

<p>200 dollars with 50% certainty or 100 dollars with absolute certainty both positevely and negatively.</p>

<p>The negative part is particularly difficult. I am giving nuances I should not.</p>

<p>I tried You find 200 dollars on the street( suppose you are unable to give them back) and after this you either have to pay 100 dollars or 200 with 50% certainty.</p>

<p>I do not know what nuances I give of but I always seem to fail to show people's inconsistency which I necessarily need to illustrate the importance of legal certainty.</p>

<p>How can I word the experiment question so as to best illustrate the Framing Effect?</p>

<microeconomics><game-theory><utility><preferences><behavioral-economics>
Framing Effect Risk-Aversion Risk-Pursuit
George Ntoulos
# Framing Effect Risk-Aversion Risk-Pursuit

(Asked by: username_0 on 2019-09-13)

I am an economics' graduate seeking to study Law and I want to illustrate the importance of legal certainty. Penalties, Costs are negativelly framed.

I am trying to word.

200 dollars with 50% certainty or 100 dollars with absolute certainty both positevely and negatively.

The negative part is particularly difficult. I am giving nuances I should not.

I tried You find 200 dollars on the street( suppose you are unable to give them back) and after this you either have to pay 100 dollars or 200 with 50% certainty.

I do not know what nuances I give of but I always seem to fail to show people's inconsistency which I necessarily need to illustrate the importance of legal certainty.

How can I word the experiment question so as to best illustrate the Framing Effect?

**Tags:** microeconomics, game-theory, utility, preferences, behavioral-economics

---

## 1 answers

### Answer by username_1 on 2019-09-13. Score: 2 | Accepted answer

The following is a slight rewording of an example in Richard Thaler's *Misbehaving* (1):

> **Positive framing of certain outcome**
>
> > Imagine you are $300 richer than you are today. You are given a choice between:
> >
> > > A. A certain gain of \$100.
> > >
> > > B. A 50% chance to gain \$200 and a 50% chance of losing \$0.
>
> **Negative framing of certain outcome**
>
> > Imagine you are $500 richer than you are today. You are given a choice between:
> >
> > > A. A certain loss of \$100.
> > >
> > > B. A 50% chance of losing \$200 and a 50% chance of losing \$0.

It can be seen that, under either framing, choice A implies \$400 richer than today while choice B implies a 50% chance of \$500 richer and a 50% chance of \$300 richer. According to Thaler, however, 72% of subjects chose A when presented with the positive framing and only 36% chose it when presented with the negative framing.

To modify this to fit the terms of your question, the initial figures in both framings could be reduced by \$300. The second would then become "Imagine you are \$200 richer ...". The first would no longer require any imagining. My (untested) intuition, however, is that the inclusion of imagining in one framing but not in the other might influence people's responses in some way that Thaler's formulation avoids.

I therefore suggest instead the following, because it retains the symmetry of imagining in both framings:

> **Positive framing of certain outcome**
>
> > Imagine you are \$50 richer than you are today. You are given a choice between:
> >
> > > A. A certain gain of \$50.
> > >
> > > B. A 50% chance to gain \$150 and a 50% chance to lose \$50.
>
> **Negative framing of certain outcome**
>
> > Imagine you are \$150 richer than you are today. You are given a choice between:
> >
> > > A. A certain loss of \$50.
> > >
> > > B. A 50% chance to gain \$50 and a 50% chance to lose \$150.

Reference

(1) Thaler R (2015) *Misbehaving: the Making of Behavioural Economics*, republished by Penguin Random House UK in 2016, p 33.

> **Comments:**
> **username_0**: When I was an exchange student in UEA(Norwich, UK) I think the question on positive framing did not require any imagination. I was still inconsistent as most students were.  

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