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When people make a decision, they put it into a frame of reference and check their assessment for profit or loss. The two Nobel Prize winners Tversky and Kahneman (2000) recognized this and called it the "framing effect".

In simple terms, the framing effect means: "What am I looking at?" Numerous studies have proven that people evaluate the same results differently.

An example: In case A, you tell the subjects they can keep 20 euros. In case B, the test persons are told that they will lose 30 euros. The starting value is 50 euros. The result remains the same as minus 30 euros, but the assessment of the situation in case A is more positive.

Another example: A profit of 10 Euro to 20 Euro (100 percent) is generally felt more strongly by the individual than the profit of 1,000 Euro to 1,010 Euro. In absolute terms, the difference is 10 euros in each case.

In trading, the framing effect means that monetary amounts are not valued realistically. Anyone who earns 50 euros a day with a 50,000 euro account usually has the impression that this is too little. However, if you manage to earn 50 euros each on 200 trading days a year, this results in an annual return of 20 percent!

The lottery game shows that people prefer a sure win of, say, 500 euros, rather than exposing themselves to the risk of winning 1,000 euros with a 50 percent probability or possibly going away empty-handed. This is also one reason why traders find it so difficult to run winnings: They prefer to opt for immediate and safe profit taking rather than taking the chance of even higher profits.

The framing effect is also regularly used in retail. Shopkeepers know that customers prefer to buy a product when they get a discount. If a pair of trousers is reduced from 198 euros to 149 euros, the customer's decision to buy is made easier. The same trousers without a discount would not have been so popular with the customer for 149 euros.