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Volume V, Number 2 • February 2012 • Archives of Past Issues
An E-Publication of the Los Angeles County Bar Association
Written by Linda B. Bulmash

This Month's Topic:

Gain/Loss Framing

You can influence your counterparts' choice by wisely framing an offer!

Example A: Choose either option 1 or 2:
Option 1: You receive $1000
Option 2: There is a 20% chance you will receive $5000 and an 80% chance you will receive nothing.

Example B: Choose either option 1 or 2:
Option 1: You lose $1000
Option 2: There is a 20% chance you will lose $5000 and an 80% chance you will lose nothing.

When faced with certain gain or the possibility of a greater gain/no gain, people will be risk adverse and choose the certain gain (see example A above). On the other hand, when faced with certain loss or the possibility of greater loss/no loss, people tend to be risk-takers (see example B above).

So how can you use this knowledge to your benefit? Frame your offer as a gain so as to Induce your counterpart to see your offer as getting a benefit rather than avoiding a risk or loss.

LACBA member Linda B. Bulmash, Esq.,
writes the Negotiation Tips.
You can contact her at:
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