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

question 38

Multiple Choice

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

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Definitions:

Ownership Interest

An individual's or entity's legal share or involvement in an asset, which grants rights and potential financial benefits.

Maturity Value

The amount payable to an investor at the end of a debt instrument's holding period or maturity date, including both the principal and any remaining interest payments.

Stated Rate

The interest rate stated on the face of a bond or other fixed-income security, which is used to calculate the interest payments to the bondholders.