Abstract

This paper develops a model of persuasive demand inducement in the expert–client relationship. The expert frames the decision on whether or not to buy expert services faced by a client with prospect-theoretic preferences, by making the client see this decision from the perspective of a particular reference point. When inducing a client to buy risky curative services, the expert should set a high reference point, and frame all outcomes as losses. When instead inducing a client to buy safe preventive services, as long as the client’s loss aversion is sufficiently high, the expert should set an intermediate reference point, framing high outcomes as gains and low outcomes as losses.