Buyers Versus Sellers: How They Differ in Their Responses to Framed Outcomes
Posted: 11 Apr 2005
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: Suggested Citation