How we change what others think, feel, believe and do |
Prospect Theory
Explanations > Theories > Prospect Theory Description | Research | So What? | See also | References
DescriptionWe tend to value a gain that is certain more than a gain that is less than certain, even when the expected value of each is the same. The opposite is even more true for losses: we will clutch at straws to avoid a certain loss, even if it means taking even greater risks. In general, when we perceive higher risk we focus on loss, whilst when risk is seen to be lower, we switch to gains. ResearchTversky and Kahneman told people to assume there was disease affecting 600 people and they had two choices:
The majority of people selected A, showing a preference for certainty. They then offered them another choice:
Most people now selected D, seeking to avoid the loss of 400 people. Notice how the framing makes the difference. A and C are the same, and B and D are the same. So what?Using itTo get people to adopt something, focus on the gain. To get them to reject something, focus on what they might lose. If they perceive high risk, focus on loss. If they perceive low risk, focus on gain. If you want them to focus on loss or gain, then set up the perceived risk accordingly. DefendingIn your choices, beware of words leading you astray. Think in a balanced way about potential gains and losses. See alsoFraming, Operant Conditioning, Perceptual Contrast Effect, Risk bias References|awa| |
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| Home | Top | Quick Links | Settings | |
Main sections: | Disciplines | Techniques | Principles | Explanations | Theories | |
Other sections: | Blog! | Quotes | Guest articles | Analysis | Books | Help | |
More pages: | Contact | Caveat | About | Students | Webmasters | Awards | Guestbook | Feedback | Sitemap | Changes | |
Settings: | Computer layout | Mobile layout | Small font | Medium font | Large font | Translate | |
| Home | Top | Menu | Quick Links | |
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