Logically equivalent choices produce different decisions when framed differently (as gains vs. losses, or with different reference points).
The same objective situation can be described as a gain or a loss, and people's choices reverse depending on the frame. '90% survival rate' is more appealing than '10% mortality rate' even though they're identical. 'Save $50' is more compelling than 'spend $50 less.' These aren't just semantic preferences—they produce systematically different choices because loss aversion makes losses loom larger than gains. Framing effects violate rational choice theory, which assumes preferences are stable across logically equivalent descriptions.
A medical treatment with '90% survival rate' is chosen more often than one with '10% mortality rate.' A discount framed as 'save $50' is more appealing than a surcharge framed as 'pay $50 extra,' even when the final price is identical.
Framing is just marketing spin that doesn't affect real preferences—framing systematically changes choices, even for consequential decisions by experts.
Why do framing effects violate rational choice theory?
You're designing a retirement savings program. How would you frame the default option to maximize participation, and why would this framing work?
Continuing an endeavor because of previously invested resources (time, money, effort) that cannot be recovered, even when continuing is irrational.
PrincipleFast, automatic, unconscious cognitive processing that operates through pattern recognition and associative memory without deliberate effort.
Mental ModelSlow, effortful, conscious cognitive processing required for complex calculations, unfamiliar tasks, and deliberate reasoning.
Mental ModelThe tendency to rely too heavily on the first piece of information encountered (the anchor) when making decisions, even when it's arbitrary or irrelevant.
PrincipleJudging the frequency or probability of events by how easily examples come to mind, leading to overestimation of vivid, recent, or emotional events.
PrincipleJudging probability by similarity to stereotypes or prototypes, while ignoring base rates and sample size.
PrincipleWhen faced with a difficult question, System 1 automatically substitutes an easier question without conscious awareness of the switch.
FrameworkLosses hurt approximately twice as much as equivalent gains feel good, making people risk-averse for gains and risk-seeking for losses.
PrincipleLogically equivalent choices produce different decisions when framed differently (as gains vs. losses, or with different reference points).
A medical treatment with '90% survival rate' is chosen more often than one with '10% mortality rate.' A discount framed as 'save $50' is more appealing than a surcharge framed as 'pay $50 extra,' even when the final price is identical.
Framing is just marketing spin that doesn't affect real preferences—framing systematically changes choices, even for consequential decisions by experts.
Framing Effects is explored in depth in "Thinking, Fast and Slow" by Daniel Kahneman. Distilo provides a deep AI-powered analysis with key insights, audio narration, and practical frameworks.