Asked by Christa Preville on Jul 11, 2024
Verified
When gasoline at $3.60/gallon looks relatively cheap after a period of $5/gallon gas, that's an illustration of the
A) planning fallacy.
B) confirmation bias.
C) framing effect.
D) availability heuristic.
Framing Effect
The cognitive bias where people's decisions are influenced by the way information is presented rather than the information itself.
Relatively Cheap
A term used to describe goods or services that are considered to be priced lower than their perceived value or compared to alternative options.
- Attain understanding of the core ideas behind prospect theory, particularly loss aversion and the impact of the framing effect on economic behaviors.
Verified Answer
AH
Ammar HussainJul 18, 2024
Final Answer :
C
Explanation :
The framing effect is at play here because the perception of the price of gasoline as "cheap" is influenced by the recent experience of higher prices, altering the context in which the current price is evaluated.
Learning Objectives
- Attain understanding of the core ideas behind prospect theory, particularly loss aversion and the impact of the framing effect on economic behaviors.