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Behavioral Economics For Dummies® by Morris Altman, PhD

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Chapter 7

How the Framing of Choices Affects Decision Making

In This Chapter

arrow Identifying the importance of framing

arrow Considering cognitive illusions

arrow Understanding how framing affects decisions

arrow Seeing how frames can be defaults

arrow Looking at frames as heuristics

arrow Addressing market failure and framing

Framing is how options and opportunities are presented. According to conventional economics, how options and opportunities are presented shouldn’t affect people’s choices — people are expected to look beyond the frame, at what’s really important.

This chapter discusses how the framing of options impacts choices. I provide a variety of examples, including the impact of defaults on choices, the effect of relative positioning on choices, and the role of negative versus positive frames in motivating choice. I elaborate upon some public policy implications of framing, which is particularly important ...

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