How presenting financial costs impacts decision making
The Economic and Social Research Institute (ESRI) and one of PRICE Lab’s funding bodies aimed to understand how price framing affects consumer decision making regarding personal loans. Experiment participants were asked to choose between loan options. Whether information on monthly repayments, annual percentage, or simple financial costs was presented significantly impacted choices. Consumers were more likely to opt for longer loans if offered monthly repayments. Participants placed significant weight on the information they were given.
WANT TO WORK TOGETHER ON A RELATED PROBLEM?
Effective interventions start with a nuanced understanding of how decisions are made. Our mission is to help large organizations be better and do better, using behavioral science.