Framing can distort perception of risk from "summary" of Your Money and Your Brain by Jason Zweig
When you consider the risks involved in an investment, how you frame them can greatly influence your perception of those risks. Framing is a powerful psychological force that can shape how we interpret information and make decisions. For example, if you are presented with the potential gains of an investment first, you may be more likely to take on higher risks because the positive framing of the gains may overshadow the negative framing of the risks. On the other hand, if you are presented with the risks first, you may be more cautious and risk-averse in your decision-making. Framing can also distort our perception of risk by making certain risks seem more or less significant than they actually are. For instance, if an investment is framed as having a 90% chance of success, you may focus on the high probability of su...
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