Important aspects from the book:

1. Anchoring effect:

Anchoring Effect one of the most important aspects of the books talks about how a human brain
thinks or reacts when it has been anchored beforehand only. For example, if we ask a group of
people these 2 questions one after the other:

I. What do you think a fountain pen is worth 1000 rupees or no?

II. How much will a good fountain pen cost?

And similarly, we ask another group of people similar question with a slight change:

I. What do you think a fountain pen is worth 500 rupees or no?

II. How much will a good fountain pen cost?

The answers for the 2nd question which we will get would be very different as 1st groups average
assumption will be higher than second group because of the Anchoring effect of the 1st question
in which price assumption was made in their mind and they were thinking around that price only.

Application of this concept in day-to-day life can be seen when a person hears to a lot of news on
robbery, he tends to believe that he might be robbed if he goes out alone or without any
precautions.

Whereas in modern day business, if see in window shopping one website is running some offers
or festive sales, we look for similar sales on other websites as well. Whereas if other websites are
not offering that much or if they are offering more, we shift our loyalty from the other website.

2. Framing Effect:

Framing effect is another aspect which was discussed in this book. Which talks about the way in
which we frame our sentences and the reaction/impact it makes on the other person. For
example:

Doctor: There is 10% chance that we will not be able to save the patient.

Doctor: There is 90% chance that we will be able to save the patient.

Both these sentences have statically similar meaning, but the 1st creates a more panic or
depressing mind frame for the listener. Whereas the second sentence gives an assurance that the
patient can be saved.

In modern day business, we can see framing effect in Smartphone industry where every company
is calming to be the best smartphone brand in India. For example: Realme says “No. 1 quality
smartphone brand”, Redmi says “largest selling smartphone brand”. Here they all are technically
right but the effect they make in consumers mind is different.
To use an example from the book, take the explosion of fear with regards to the chemical Alar,
sprayed on apples to regulate their growth. The media sensationalized the story, leading to an
exaggeration of the actual risk posed, and further fueling stories in the media. The public
understandably applied pressure on politicians to address the risk, and they in turn obliged with
an exaggerated response, banning the use of the chemical and costing farmers a fortune. In the
end a small risk was blown totally out of proportion and “the net effect of the incident on public
health was probably detrimental because fewer good apples were consumed”. Certainly,
therefore, “psychology should inform the design of risk policies that combine the experts’
knowledge with the public’s emotions and intuitions”.