Suppose 5,000 students were split into two groups of 2,500.Both groups were first presented with an image of a new high-end pair of shoes produced by UGG,a footwear company.
The first group was given the following statement and then asked the following question: "The normal retail price of these shoes is $200.Would you be willing to pay $125 for them?"
The second group was given the following statement and then asked the following question: "The normal retail price of these shoes is $450.Would you be willing to pay $125 for them?"
Suppose that 13% of the students in the first group answered yes and that 63% of the students in the second group answered yes.It is likely that more students in the second group were willing to pay $125 for the pair of shoes because they were told the normal price was much higher.This is an example of a ________ effect in decision-making.
A) bootstrapping
B) market-making
C) utilitarian
D) framing
E) psychosomatic

Question

Quizplus · Accepted Answer

This is an example of the framing effect, which is when the way information is presented (or framed) affects the decisions people make. In this case, the second group was given a higher reference price, which made the $125 price seem like a better deal in comparison. This led to more students in the second group being willing to pay for the shoes at that price.

Suppose 5,000 Students Were Split into Two Groups of 2,500