Carphone Warehouse

This is an advert from Carphone Warehouse highlighting how much money individuals might be losing on their current phone tariff.

Individuals perceive losses and gains differently and this advert makes use of the loss aversion tendency (i.e. people strongly prefer to avoid losses than to acquire gains). Making potential loss explicit if more powerful than highlighting potential gains through switching tariff. The use of a loss framework is likely to generate a motivation to avoid loss and change tariff.

Tversky and Kahneman’s (1981) explored how framing influences decision making. Participants were asked to imagine preparation for the outbreak of a disease that could affect 600 people and asked to choose between two treatment programs, in a gain or loss frame.

Gain Frame (Program A: 200 will be saved OR Program B: 1/3 chance that 600 will be saved but 2/3 chance that nobody will be saved)

Loss Frame (Program A: 400 will die OR  Program B: 1/3 chance nobody will die but a 2/3 chance that 600 will die)

In a gain frame, 78% select Program A. In a loss frame, 78% select Program B.

Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211 (4481), 453-458.