Buyers Versus Sellers: How They Differ in Their Responses to Framed Outcomes

Consumers’ reactions to a difference in price can depend on how it is framed. If buyers interpret paying 60 rather than 5 as getting a 5 discount, then they are likely to consider paying 0 to be a gain and paying 65 to be a nongain. Alternatively, if they interpret having to pay 5 rather than 60 as incurring a penalty, then they may consider paying 60 to be a nonloss and paying 5 to be a loss. Similarly, sellers can also...