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

Posted: 11 Apr 2005

See all articles by Ashwani Monga

Ashwani Monga

University of South Carolina

Rui Zhu

Rice University

Abstract

Consumers' reactions to a difference in price can depend on how it is framed. If buyers interpret paying $60 rather than $65 as getting a $5 discount, they are likely to consider paying $60 to be a gain and paying $65 to be a nongain. Alternatively, if they interpret having to pay $65 rather than $60 as incurring a $5 penalty, they may consider paying $60 to be a nonloss and paying $65 to be a loss. Similarly, sellers can also experience gains, nongains, nonlosses, and losses. This paper suggests that buyers are prevention focused and consequently place a greater emphasis on loss-related frames whereas sellers are promotion focused and place a greater emphasis on gain-related frames. Therefore, for equivalent positive outcomes, buyers feel better about nonlosses but sellers feel better about gains. For equivalent negative outcomes, buyers feel worse about losses but sellers feel worse about nongains. These effects, however, disappear when there is little motivation to process information about the monetary transaction.

Keywords: Buyer, Seller, Framing, Regulatory focus, Motivation

JEL Classification: M30, C91

Suggested Citation

Monga, Ashwani and Zhu, Rui, Buyers Versus Sellers: How They Differ in Their Responses to Framed Outcomes. Available at SSRN: https://ssrn.com/abstract=701721

Ashwani Monga (Contact Author)

University of South Carolina ( email )

United States
803-777-5918 (Phone)

Rui Zhu

Rice University ( email )

6100 South Main Street
Houston, TX 7705-1892
United States

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