Gain and Loss Framing Effects : an application to small efforts and to the valuation of non-financial performance
Tenured Researcher at GAEL (Grenoble Applied Economics Lab)
Gain and loss framing influences decision making (Kahneman and Tversky, 1979). We investigate the impact of gain and loss framing when individuals must make small and repetitive efforts as it is the case for energy saving decisions. We run a lab experiment with a 2 by 3 design asking participants to realize a real effort task under a piece rate payment scheme: either gain framed or loss framed incentives, crossed with a fixed payoff, or a low or high payoff with equal probability, revealed to individuals prior to the task or after completing the task. The results show that gain and loss framing does not influence behavior for small repetitive efforts. In a previous study, we looked at the impact of positive and negative environmental, social and governance (ESG) corporate practice disclosure on equity financing. We conducted a framed field experiment in which professional private equity investors competed in closed auctions to acquire fictive firms. We observed that corporate non-financial (ESG) performance disclosure impacts firm valuation and investment decision. The main result is an asymmetric effect, investors reacting more to bad ESG practice disclosure than to good ESG ones.
Université Montpellier - Faculté d'économie, salle 416
Avenue Raymond Dugrand 34960 Montpellier
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