The Framing of Consumer Choices

Kent B. Monroe, Virginia Polytechnic Institute and State University
[ to cite ]:
Kent B. Monroe (1987) ,"The Framing of Consumer Choices", in NA - Advances in Consumer Research Volume 14, eds. Melanie Wallendorf and Paul Anderson, Provo, UT : Association for Consumer Research, Pages: 182.

Advances in Consumer Research Volume 14, 1987      Page 182


Kent B. Monroe, Virginia Polytechnic Institute and State University


In consumer research, it is known that people often respond differently to the same questions asked at different times. It is also known that different forms of the same question can elicit very different responses. It is also known that consumers often choose different products at different times even though the apparent economic (objective features) of the choice seem invariant. Earlier consumer research sought to explain these choice inconsistencies by suggesting that different purchase situations or contexts could lead to inconsistent purchase choices. However, Kahneman and Tversky (1979) have recently offered prospect theory illustrating psychological principles that underlie the perceptions of decisions. These perceptions, together with an evaluation of probabilities and outcomes, produce preference shifts and reversals when the same choices are posed in different ways. Thus, it is clear that choices often depend on the way a problem is posed (framed) as much as the objective features of a problem.


Over the past 20 years, consumer researchers have explored consumer choice behavior by applying theoretical frameworks from either psychology or economics. Kahneman and Tversky's prospect theory represents a unique contribution in that it blends expected utility theory with psychophysical influences on choice. A major distinction between expected utility theory (EUT) and prospect theory (PT) is that in PT values are assigned to gains and losses, and decision weights replace the probabilities of EUT (Corstjens and Gautschi 1983). Thus, the revised theory of choice replaces the utility function with a value function (Thaler 1985).

In PT, the psychophysics of value leads to risk aversion when a decision is framed in terms of gains, and to risk seeking when the decision is framed in terms of losses. Sure or certain events tend to be overweighted relative to events of moderate probability. Further, decision problems can be described in multiple ways, leading to different preferences contrary to the invariance criterion of rational choice (Kahneman and Tversky 1984). Finally, Thaler (1980, 1985) proposes that consumers code the outcomes of purchase situations into mental accounts. Recognizing that a consumer purchase is a mixed outcome in that the consumer gives up something (usually money) to acquire something (product), means that the typical purchase choice involves both gains and losses. Moreover, both Kahneman and Tversky (1984) and Thaler (1985) suggest that the acceptability of an offer can depend on whether the negative outcome (e.g., sacrifice of money) is framed as a cost or as an uncompensated loss.

Another key aspect of PT concerns the distinction between experience value and decision value (Kahneman and Tversky 1984). Experience value is the degree of pleasure or satisfaction versus pain or anguish in the actual experience of an outcome. Decision value is the contribution of the anticipated outcome to the overall attractiveness or aversiveness of an alternative offer. Experience, either past or anticipated, influences choice by serving as a reference point for evaluating current options. Further, as a consumer acquires experience or information, this point of comparison changes. Thus, an important research issue concerns how this adaptation level (Helson 1964), or aspiration level (Puto 1986) is determined or formed, and how such a reference point separates positive from negative outcomes.


Apart from these conceptual frameworks little formal consumer research has been done on the issues of framing and reference points. In the past year, several efforts have applied prospect theory's concept of framing to consumer and buyer research. Levin, Johnson, Russo, and Deldin (1985) asked subjects to rate various choices of ground beef on the basis of price and percentage of lean (for half of the subjects) or percentages of fat (for the other half). The price and percentage lean condition produced significantly higher satisfaction ratings. Even though the price-quality choices were identical, framing one option in terms of percentage fat stressed the losses inherent in the choice (cost and health risk) rather than a mixed outcome (price and good taste).

Wiener, Gentry and Miller (1986) investigated preferences for insurance when offered in terms of assets (gains) versus as a loss. They found tentative support for the prediction that the asset frame would produce stronger likelihood for an insurance purchase. Puto (1986) investigated the impact of changing reference points on industrial buyers' choices. By varying and measuring buyers' purchase aspiration levels, he was able to establish a consistent relationship between their reference points and choices. Further, aspiration levels or decision reference points were influenced by expectations about the future trend of prices.


Given the small number of recent attempts to address the implications of adapting prospect theory to consumer research, this session discussed the theory and its significance for consumer research. Such an adaptation offers considerable promise because it integrates economic reasoning with established concepts from cognitive psychology


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