Ever wondered why our mind always tend to favour the poor and not the rich? Why is taxing super rich is always an agenda of domestic politics? Why did Indian demonetization drive, in which 86% currency was rendered invalid, was accepted by majority?
The answer to these question is Framing effect. You have cognitive bias against the rich. We all want to penalise the rich, out of jealousy or framing where bias where one become rich by exploiting the poor(whole socialists mind-set). However action is not justifiable in any aspect.
Similar effects are also witnessed in day today life, which we ignore. I would mention few and help you to use it everyday life:
• Human mind is designed to not accept loss or failure. Consider the impact of 2 messages
- Due to Global warming nearly 36% of amazon forest is lost
- Amazon forest faces a decrease of 36% due to global warming
The first message has a wider impact as due to failure associated. This effect is mentioned by Daniel kanheman in his book ‘thinking fast and slow.’ This can be effectively used in schools or management where teachers and managers can put the message of failure alternatively.
• Apple has effective advertisement style. When it wanted to introduce ipod series, Steve jobs changed the colour of cord to white as against prevailing black. This created a demand for the product as it was fueled by small social group.
Credits – Google images
Note here the white colour is exaggerated
This is an extremely powerful technique in marketing and used a number of times by companies compelling you to buy under peer pressure. Knowing these beforehand will help you to prevent marketing strategies. Alternatively you can use this in marketing of your products.
• Ever sold a house or a car? I bet initially you set a price higher than prevailing market price. People value things more which they possess. This is endowment effect. An explanation for this is subjective interpretation of worth of things. Another study suggest that this prevails even when you get feel of owning the object concerned. All the try rooms, free sample in shopping are result of this.
Credits – Google images
This can be used in managing teams. A best team trophy (just like football world cup trophy) should be circulated inside the department or company. The subjective notion of loss aversion would induce competition and spur growth in company.
This is a small list of psychology biases. Knowing these beforehand would actually help you to make intelligent choices and make your life easier.