Tuesday, August 19, 2014

Vacation Framing: Experiment Results

Here are the results of the one-day, one-question experiment I started last night. The hypothesis was that participants would value 2 weeks of vacation time more in a hypothetical job offer if it was framed as a loss compared to a gain - a pretty classic endowment effect experiment. I'll put the main limitation up front - the sample is almost laughably biased towards a relatively savvy group of behavioural science nerds because I advertised it here and on twitter. Thanks to the 113 people who participated in this experiment. It was motivated by p3, paragraph 13 of this Sunstein & Thaler paper.

Participants were randomized into either a "loss frame" or "gain frame " question. They were:

In both conditions the participants are facing the same task - you have 2 weeks vacation for sure, now put a value on the 2 negotiable weeks. The only difference is whether it was framed a loss (you have 4, how much do you want for the 2) or a gain (you have 2, how much will you pay for 2 more).

Here are the $ distributions of the two groups. You can see a considerable amount of clustering at $5,000 (the maximum value possible) in the loss frame, indicating those people valued the 2 negotiable weeks very highly.

Lastly, here are the average $ values. Those in the loss frame were willing to pay 1.88 times more - neatly in line with the 2:1 ratio usually observed in loss:gain situations.

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