Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 8 - Behavioral Economics - Discussion Questions - Page 192: 7

Answer

The framing effect suggests that we may raise more revenue by stating that the school is better in sports than 99% of other schools as compared to stating that the school was #3 in sports.

Work Step by Step

The framing effect suggests to us that we may raise more revenue by stating that the school is better in sports as compared to 99% of other schools. The reason is that value 99 here serves as an "anchor" number and may increase the size of the donation. If an individual person has been exposed to a larger number prior to making the donation they will likely use this number as a reference point. If we started the school was #3 in sports, the donations might be lower because people will use 3 as their reference number or "anchor"
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