THE BEHAVIORAL ECONOMICS GUIDE 2016

According to regulatory fit theory, messages and frames that are presented as gains are more
influential under a promotion focus, whereas those presented as non-gains or losses carry more
weight in a prevention focus. For example, research by Lee and Aaker (2004) found that ‘gain
frames’ in advertising (“Get energized”) lead to more favorable attitudes when the body of the
advertising message is written in promotional terms (e.g. emphasizing the energy benefits of
drinking grape juice), whilst ‘loss frames’ (“Don’t miss out on getting energized!”) have a more
favorable effect when the main body of the ad focuses on prevention (e.g. stressing the cancer
reduction benefits of drinking grape juice).
Representativeness heuristic
Representativeness is one of the major general purpose heuristics, along with availability and
affect, and it is used when we judge the probability that an object or event A belongs to class B by
looking at the degree to which A resembles B. When we do this, we neglect information about the
general probability of B occurring (its base rate) (Kahneman & Tversky, 1972). Consider the
following problem:
Bob is an opera fan who enjoys touring art museums when on holiday. Growing up, he enjoyed playing
chess with family members and friends. Which situation is more likely?
A. Bob plays trumpet for a major symphony orchestra
B. Bob is a farmer
A large proportion of people will choose A in the above problem, because Bob’s description
matches the stereotype we may hold about classical musicians rather than farmers. In reality, the
likelihood of B being true is far greater, because farmers make up a much larger proportion of the
population.
Similarity- or prototype-based evaluations more generally are a common cognitive shortcut across
domains of life. For example, a consumer may infer a relatively high product quality from a store
(generic) brand if its packaging is designed to resemble a national brand (Kardes, Posavac, &
Cronley, 2004).
Risk-as-feelings
‘Consequentialist’ perspectives of decision-making under risk or uncertainty (risky-choice theories,
see e.g. prospect theory) tend to either focus on cognitive factors alone or consider emotions as
an anticipated outcome of a decision:
The risk-as-feelings hypothesis (Loewenstein et al., 2001), on the other hand, also includes
emotions as an anticipatory factor, namely feelings at the moment of decision-making:
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