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The Duality of Desire: How Brands Use Gain vs Loss Framing to Influence Customer Behavior
Framing Bias — The art of presenting information, or “framing,” significantly influences how individuals perceive and act upon it. This phenomenon is particularly prominent in advertising and marketing, where companies often use different framing techniques to sway consumer behaviour. Gain vs Loss is one such framing technique where a problem or choice is presented or framed in terms of potential gains or losses. For example, presenting a situation as a potential gain (e.g. “you have the opportunity to earn an extra $100”) may elicit a more favourable response than presenting the same situation as a potential loss (e.g. “you could lose $100”). This effect can have a significant impact on decision-making, particularly when it comes to risk aversion and motivation.
It’s important to note that framing bias is a mental shortcut our brain takes, and brands have capitalized on this phenomenon to manipulate consumer perception. This article will use examples of the power of gain and loss framing in marketing and advertising.
There have been many studies that have investigated the impact of framing on decision-making.
a) One of the most famous studies in this area is by psychologists Daniel Kahneman and Amos Tversky, who found that individuals were more likely to choose a certain option when it was framed as a potential gain compared to when it was framed as an equivalent potential loss.
For example, in one study, participants were asked whether they would prefer a sure gain of $240 or a 50% chance to win $1000 and a 50% chance to win nothing. Most participants chose the sure gain, demonstrating a preference for avoiding loss. However, when the problem was framed differently as a choice between a sure loss of $760 or a 50% chance to lose $1000 and a 50% chance to lose nothing, the majority of participants chose the risky option, demonstrating a preference for potential gains.
