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 percent of the students in the first group answered yes and that 63 percent 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

The framing effect is the phenomenon that occurs when presenting the same information in different ways leads to different judgments or decisions. In this case, the different wording of the statement ("normal retail price" of $200 vs. $450) framed the value of the shoes differently for each group, leading to different willingness to pay $125.

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