What Is the Framing Effect?

By Kristi Waterworth – Updated Apr 9, 2025 at 12:36 PM

Key Points

Framing effect influences investment choices by skewing perception of risk and reward.
Identify and analyze all investment details to mitigate emotional biases introduced by framing.
Stay informed and focus on long-term goals to effectively counteract the framing effect's impact.

How things are presented to us -- how they are framed -- can have a significant impact on how we perceive them. This framing effect can be used to influence decision-making in otherwise savvy investors. Let's examine framing and how we can overcome it in this article.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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