Research on the framing effect shows that decision makers are risk averse when they focus on _____ and risk seeking when they focus on _____.
A) gains; gains
B) gains; losses
C) losses; gains
D) losses; losses
E) None of the above is correct.

Question

Quizplus · Accepted Answer

The framing effect states that the way in which options are presented (framed) can influence decision making. When decision makers focus on gains, they tend to be risk averse, while when they focus on losses, they tend to be risk seeking. Therefore, option B is correct: decision makers are risk averse when they focus on gains (because they want to protect those gains) and risk seeking when they focus on losses (because they want to avoid those losses).

Research on the Framing Effect Shows That Decision Makers Are