Framing and Loss Aversion Tested in the Context of an Academic Examination

This paper examines the effects of framing a bonus question on an exam as a potential gain or as a potential loss. Prospect theory shows that an individual's value function is commonly concave for gains and convex for losses. Students in our experiment were randomly divided into two treatments and were asked to answer a bonus problem at the end of an economics exam. Half of the students were told that they will gain 5 bonus points if they answer the question correctly while the others were told that they received 5 bonus points for completing the first part of the test and would lose these points if they do not successfully answer the question. We find that students in the Loss treatment spend a significantly longer time answering the question. Our research implies that educators can motivate students to work harder on assessments by framing their poor performance as a loss instead of framing their satisfactory performance as a gain.