Fear of Loss Trumps Anticipation of Gains

Written by Brad Phillips @MrMediaTraining on August 24, 2012 – 6:06 am

Editor’s note: This is part five of our five-part series, The Psychology of Public Speaking.  All five posts in this series are excerpted from 100 Things Every Presenter Needs To Know About People by Susan Weinschenk.

You are preparing a presentation for your project team in which you will suggest that the team change the method they use for the next project.

Should you base the presentation on all the advantages that the new method will give the team (anticipation of gain) or on the possible problems and things that will go wrong if they don’t change to the new method (fear of loss)?

One of my favorite pieces of research on unconscious mental processing was conducted by Antoine Bechara and his team (1997). Participants in the study played a gambling game with decks of cards.

Each person received $2000 of pretend money. They were told that the goals were to lose as little of the $2000 as possible and to try to make as much over the $2000 as possible. There were four decks of cards on the table. Each participant turned over a card from any of the four decks, one card at a time, and continued turning over cards from the deck of their choice until the experimenter told them to stop.

The subjects didn’t know when the game would end. They were told that they earned money every time they turned over a card. They were also told that sometimes when they turned over a card, they earned money but also lost money (by paying it to the experimenter). The participants didn’t know any of the rules of the gambling game.

Here are what the rules actually were:

When they turned over any card in deck A or B, they earned $100. When they turned over any card in deck C or D, they earned $50. Some cards in decks A and B also required participants to pay the experimenter a lot of money, sometimes as much as $1250. Some cards in decks C and D also required participants to pay the experimenter, but the amount they had to pay was only an average of $100.

Over the course of the game, decks A and B produced net losses if participants continued using them. Continued use of decks C and D rewarded participants with net gains.

The rules never changed. Although participants didn’t know this, the game ended after 100 cards had been turned over.

THE UNCONSCIOUS MIND PICKS UP THE DANGER FIRST

Most participants started by trying all four decks. At first, they gravitated toward decks A and B because those decks paid out $100 per turn. But after about 30 turns, most turned to decks C and D. They then continued turning cards in decks C and D until the game ended.

During the study, the experimenter stopped the game several times to ask participants about the decks. The participants were connected to a skin conductance sensor to measure their skin conductance response (SCR). The participants’ SCR readings were elevated when they played decks A and B (the “dangerous” decks) long before they consciously realized that A and B were dangerous.

Their SCR increased before they touched—or even thought about—using decks A and B. Their unconscious knew that decks A and B were “dangerous” and resulted in a loss. This was evidenced by the spike in the SCR. However, that’s all unconscious. Their conscious minds didn’t yet know that anything was wrong.

Eventually participants said they had a hunch that decks C and D were better, but the SCR shows that the old brain figured this out long before the new brain realized it. By the end of the game, most participants had more than a hunch and could articulate the difference in the two decks, but a full 30 percent of the participants couldn’t explain why they preferred decks C and D. They said they just thought those decks were better.

FEAR OF LOSING WHAT YOU ALREADY HAVE

People are most afraid of losing what they already have or what they almost have.

Barry Schwartz (2004) researched people buying cars. Participants test-drove cars with all the options. In one condition, they were shown the price of the car with all the options. If they said the price was too expensive, they then were asked to take away the options in an effort to reduce the price.

In another condition, they were shown the base price of the car (without options) along with a description and price of each option. They were asked to select which options they wanted to add, increasing the price with each option.

He found that people will spend more money in the first condition. The theory is that when people have experienced the car in its entirety they will be reluctant to lose what, in some sense, they feel they already have.

PHRASING YOUR MESSAGE IN TERMS OF LOSS RATHER THAN GAIN

In order to get people to take action you should consider framing your presentation around fear of loss rather than anticipation of gain. You can certainly build in the positive aspects of why they should make a certain decision, but ultimately phrasing the request for action based on fear of loss will result in more action.

For example, let’s say you are making a presentation on why your team should switch to using a new vendor for the company’s ad campaigns. You could focus on how good the new ad agency is, the wonderful work they do, and all that you would gain from working with them. The new agency is larger, they have more experience in your industry, and so on.

But it will be more effective if you start with what you will lose if you don’t go with the new agency—you will lose all the experience that a big agency has, you will lose opportunity, and so on. You are essentially saying the same or very similar things, but you are phrasing them in terms of what the people in the room will lose rather than what they will gain.

Copyright © 2012. Used with permission of PearsonEducation, Inc. and New Riders.

Interested in purchasing 100 Things Every Presenter Needs To Know About People? You can find the soft cover here and the Kindle edition here.

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