The study of framing effect in electronic bargaining

Authors:Hsin-Hui Lin; Yung-Da Chen; Chin-Shan Wu;Fei-Fei Cheng;

Journal: Chia Da Management Review. Dec. 2007, 27(2): 249-273.

Keywords: Framing effect; electronic bargaining; concession strategy; experimentation

Abstract:
It is often possible that the decision problem can be presented in more than one way. Framing effect refers to the situation in which the different descriptions of the same logic result in different judgments. Many electronic bargaining system designers assume that human decision making follows the rational model. In many situations, however, the environments are complex and human cannot react like rational model. Instead, people rely on a limited number of heuristic principles which often cause biases. This study aims to investigate framing effect of human judgment in electronic bargaining context. An experiment was conducted to understand the effect of attribute framing and goal framing on Internet consumers' bargaining performance including bargaining efficiency and sellers' profit. Moreover, the system concession was considered to play the role of moderator. The results indicated that system concession significantly influences the framing effect on subjects' bargaining performance. Meanwhile, positive attribute framing and negative goal framing messages are proven to be contributive in increasing sellers' profit.