Abstract

http://ssrn.com/abstract=1990226
 
 

References (20)



 


 



Framing Contracts - Why Loss Framing Increases Effort


Richard R. W. Brooks


Yale University - Law School

Alexander Stremitzer


UCLA School of Law

Stephan W. Tontrup


Max Planck Institute for Research on Collective Goods

January 23, 2012

Journal of Institutional and Theoretical Economics (JITE), 2012, 168 (1): 62-82.
UCLA School of Law, Law-Econ Research Paper No. 12-05
Yale Law & Economics Research Paper No. 438

Abstract:     
Recent evidence from the field (Hossain and List, 2009) suggests that contracts framed in terms of a loss (a deduction is taken for failing to meet a threshold) lead to greater effort than contracts framed in terms of a gain (a bonus is given for meeting a threshold). We investigate two explanations for this framing effect in a laboratory setting. First, we find that the loss frame communicates the expectation that achieving the bonus is the default and that our subjects comply with this expectation. Second, we find evidence for an endowment effect, even though the bonus is just a monetary payment that subjects do not even have in their possession.

Number of Pages in PDF File: 28

Keywords: Contracts, Loss Framing, Experimental Law and Economics

JEL Classification: K12, C91, L14, J41

working papers series


Download This Paper

Date posted: January 25, 2012 ; Last revised: April 1, 2013

Suggested Citation

Brooks, Richard R. W. and Stremitzer, Alexander and Tontrup, Stephan W., Framing Contracts - Why Loss Framing Increases Effort (January 23, 2012). Yale Law & Economics Research Paper No. 438; Journal of Institutional and Theoretical Economics (JITE), 2012, 168 (1): 62-82.; UCLA School of Law, Law-Econ Research Paper No. 12-05; Yale Law & Economics Research Paper No. 438. Available at SSRN: http://ssrn.com/abstract=1990226 or http://dx.doi.org/10.2139/ssrn.1990226

Contact Information

Richard R. W. Brooks
Yale University - Law School ( email )
P.O. Box 208215
New Haven, CT 06520-8215
United States
Alexander Stremitzer
UCLA School of Law ( email )
405 Hilgard Avenue
Box 90095-1476
Los Angeles, CA 90095-1476
United States
HOME PAGE: http://www.law.ucla.edu/faculty/all-faculty-profiles/professors/Pages/Alexander-Stremitzer.aspx
Stephan W. Tontrup (Contact Author)
Max Planck Institute for Research on Collective Goods ( email )
Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
00492289141643 (Phone)
0049/228/91416-55 (Fax)
HOME PAGE: http://www..coll.mpg.de/

Feedback to SSRN


Paper statistics
Abstract Views: 968
Downloads: 225
Download Rank: 77,039
References:  20

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.360 seconds