Framing in Behavioral Contracts

• Main Authors: HUANG, SIANG-LING, 黃湘凌
• Other Authors: SU, ALICE PENG-JU
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/n2gdk5

碩士 === 國立臺北大學 === 經濟學系 === 105 === Framing may temporarily increase how consumers evaluate the product upon singing the contract. However, consumers will distinguish the true value of the product from the framing effect after singing the contract. We study how the firm designs the transaction contract and framing when it has imperfect information on consumers’ preferences and whether they are vulnerable to framing. We first study the optimal incentive compatible contract with non-discriminative framing. Given which, consumers who are vulnerable to framing over-estimate their utility from other options in the contract. The screening mechanism in the optimal contract is thus truncated. We then study the optimal contract with discriminative framing. The firm can impose framing on some but not all options in the contract, so that consumers who are vulnerable to framing have no incentive to select options that are not framed. The optimal contract resumes its screening mechanism.