ABSTRACT
The term “framing effect” describes the finding that people often respond differently to different descriptions or “frames” of a single situation. Framing effects violate the principle of “invariance” which states that one's decision should not be affected by how a situation is described. An important question about framing effects is whether subjects agree that two versions are equivalent. The term “framing effect” assumes that subjects would agree that the two situations were equivalent. The study reported here tests this assumption. In this study, subjects were first asked to answer framing effect problems and then were asked to compare two versions of a problem and state whether the two versions should be treated the same. In some cases such as Kahneman and Tversky's (1984) lives lost/lives saved problem, subjects treated two versions differently but reported that they should be treated the same. This is called a “true framing effect.” In other cases such as Thaler's (1980) reference point problem, subjects treated the two versions differently and stated that they should be treated differently. This is described as a “pseudo framing effect.” The distinction between true and pseudo framing effects has implications for both normative and descriptive theories of decision making.
