ECONOMICS
DECISION MAKING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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We prefer less certain outcomes when information is framed in positive language.
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We prefer more certain outcomes when information is framed in negative language.
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We prefer less certain outcomes when information is framed in negative language.
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We prefer more certain outcomes to less certain outcomes.
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Detailed explanation-1: -The correct answer is The way in which options are presented influence the selection of option. The framing effect occurs when decision-makers choose inconsistent solutions for identical problems based on the way the problems are presented to them.
Detailed explanation-2: -When making decisions, people will be influenced by the different semantic descriptions of the same issue, and have different risk preferences, which is called the framing effect indicating that people make decisions based on the potential value of losses and gains rather than the final outcome.
Detailed explanation-3: -The framing effect is a type of cognitive bias or error in thinking. “Framing” refers to whether an option is presented as a loss (negative) or a gain (positive). People are generally biased toward picking an option they view as a gain over one they view as a loss, even if both options lead to the same result.
Detailed explanation-4: -The framing effect is a cognitive bias where people decide on options based on whether the options are presented with positive or negative connotations; e.g. as a loss or as a gain. People tend to avoid risk when a positive frame is presented but seek risks when a negative frame is presented.