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The Framing Bias-Shaping How a Problem Is Presented

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Essay

The framing bias-shaping how a problem is presented.The framing bias is the tendency of decision makers to be influenced by the way a situation or problem is presented to them.For instance,customers have been found to prefer meat that is framed as "85% lean meat" instead of "15% fat," although,of course,they are the same thing.


Definitions:

Effective Rate

The actual interest rate on an investment or loan, considering the compounding of interest at specific intervals within a given time period.

Interest Rate

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage.

Effective Yield

The total yield on an investment after considering the effects of compounding interest or dividends over a specific period.

Simple Annualized

A calculation estimating yearly returns by extrapolating non-annual data without accounting for compounding effects.

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