The majority choice in this problem is risk averse: the prospect of certainly saving 200 lives is more attractive than a risky prospect of equal expected value, that is, a one-in-three chance of saving 600 lives. The Framing of Decisions and the A second group of respondents was given the cover story ofproblem 1 with a different formulation of the alternative Psychology of Choice programs, as follows:

Amos Tversky and Daniel Kahneman Problem 2 [N = 1551: If Program C is adopted 400 people will die. [22 percent] If Program D is adopted there is 113 probabil- ity that nobody will die, and 213 probabili- Ecxplanations and predictions of tional choice requires that the preference ty that 600 people will die. [78 percent] people's choices, in everyday life as well between options should not reverse with Which of the two programs would you favor? as in the social sciences, are oftenfound- changes of frame. Because of imperfec- ed on the assumption of human rational- tions of human perception and decision, The majority choice in problem 2 is ity. The definition of rationality has been however, changes of perspective often risk taking: the certain death of 400 much debated, but there is general agree- reverse the relative apparent size of ob- people is less acceptable than the two-in- ment that rational choices should satisfy jects and the relative desirability of op- three chance that 600 will die. The pref- some elementary requirements of con- tions. erences in problems 1 and 2 illustrate a sistency and coherence. In this article We have obtained systematic rever- common pattern: choices involving gains are often risk averse and choices in- volving losses are often risk taking. Summary. The psychological principles that govern the perception of decision prob- However, it is easy to see that the two lems and the evaluation of probabilities and outcomes produce predictable shifts of problems are effectively identical. The preference when the same problem is framed in different ways. Reversals of prefer- only differencebetween them is that the ence are demonstrated in choices regarding monetary outcomes, both hypothetical outcomes are described in problem I by and real, and in questions pertaining to the loss of human lives. The effects of frames the number of lives saved and in problem on preferences are compared to the effects of perspectives on perceptual appear- 2 by the number oflives lost. The change ance. The dependence of preferences on the formulation of decision problems is a is accompanied by a pronounced shift significant concern for the theory of rational choice. from risk aversion to risk taking. We have observed this reversal in several groups of respondents, including univer- we describe decision problems in which sals of preference by variations in the sity faculty and physicians. Inconsistent people systematically violate the re- framing of acts, contingencies, or out- responses to problems I and 2 arise from quirements of consistency and coher- comes. These effects have been ob- the conjunction of a framing effect with ence, and we trace these violations to the served in a variety of problems and in contradictory attitudes toward risks in- psychological principles that govern the the choices of differentgroups of respon- volving gains and losses. We turn now perception of decision problems and the dents. Here we present selected illustra- to an analysis of these attitudes. evaluation of options. tions of preference reversals, with data A decision problem is defined by the obtained from students at Stanford Uni- acts or options among which one must versity and at the University of British The Evaluation of Prospects choose, the possible outcomes or con- Columbia who answered brief question- sequences of these acts, and the contin- naires in a classroom setting. The total The major theory of decision-making gencies or conditional probabilities that number of respondents for each problem under risk is the expected utility model. relate outcomes to acts. We use the term is denoted by N, and the percentage This model is based on a set of axioms, "decision frame" to refer to the deci- who chose each option is indicated in for example, transitivity of preferences, sion-maker's conception ofthe acts, out- brackets. which provide criteria for the rationality comes, and contingencies associated The effect of variations in framing is of choices. The choices of an individual with a particular choice. The frame that a illustrated in problems 1 and 2. who conforms to the axioms can be de- decision-maker adopts is controlled part- scribed in terms ofthe utilities of various ly by the formulation of the problem and Problem 1 [N = 1521: Imagine that the U.S. outcomes for that individual. The utility is preparing for the outbreak of an unusual partly by the norms, habits, and personal Asian disease, which is expected to kill 600 of a risky prospect is equal to the ex- characteristics of the decision-maker. people. Two alternative programs to combat pected utility of its outcomes, obtained It is often possible to frame a given de- the disease have been proposed. Assume that by weighting the utility of each possible cision problem in more than one way. the exact scientific estimate of the con- outcome by its probability. When faced sequences of the programs are as follows: Alternative frames for a decision prob- with a choice, a rational decision-maker lem may be compared to alternative per- If Program A is adopted, 200 people will be saved. [72 percent] will prefer the prospect that offers the spectives on a visual scene. Veridical highest expected utility (1, 2). perception requires that the perceived If Program B is adopted, there is 113 probabil- ity that 600 people will be saved, and Dr. Tversky is a professor of psychology at Stan- relative height of two neighboring moun- 213 probability that no people will be ford University, Stanford, California 94305, and Dr. tains, say, should not reverse with saved. 128 percent] Kahneman is a professor of psychology at the Uni- versity of British Columbia, Vancouver, Canada changes of vantage point. Similarly, ra- Which of the two programs would you favor? V6T 1W5.

SCIENCh, VOL. 211, 30 JANUARY 1981 0036-807518110130-0453$01.5010 Copy1-ight Q 1981 AAAS 453 As will be illustrated below, people ex- The Framingof Acts hibit patterns of preference which appear incompatible with expected utility theo- Problem 3 [N = 1501: Imagine that you Face ry. We have presented elsewhere (3) a the following pair of concurrent decisions. First examine both decisions, then indicate descriptive model, called prospect theo- the options you prefer. ry, which modifies expected utility theo- Decision (i). Choose between: ry so as to accommodate these observa- A. a sure gain of $240 [84 percent] tions. We distinguish two phases in the B. 25% chance to gain $1000, and choice process: an initial phase in which 75% chance to gain nothing [ 16 percent] acts, outcomes, and contingencies are Decision (ii). Choose between: C. a sure loss of $750 113 percent] framed, and a subsequent phase of eval- D. 75% chance to lose $1000, and uation (4). For simplicity, we restrict the Fig. 1. A hypothetical value function. 25% chance to lose nothing [87 percent] formal treatment of the theory to choices involving stated numerical probabilities The majority choice in decision (i) is and quantitative outcomes, such as mon- has the following properties. First, im- risk averse: a riskless prospect is pre- ey, time, or number of lives. possible events are discarded, that is, ferred to a risky prospect of equal or Consider a prospect that yields out- n(0) = 0, and the scale is normalized so greater expected value. In contrast, the come x with probability y, outcome y that n(l) = 1, but the function is not well majority choice in decision (ii) is risk tak- with probability q, and the status quo behaved near the endpoints. Second, ing: a risky prospect is preferred to a with probability 1 - y - q. According for low probabilities n(p) >p, but riskless prospect of equal expected val- to prospect theory, there are values v(.) TO)) + n(l - p) 5 1. Thus low proba- ue. This pattern of risk aversion in associated with outcomes, and decision bilities are overweighted, moderate and choices involving gains and risk seeking weights n(.) associated with probabili- high probabilities are underweighted, in choices involving losses is attributable ties, such that the overall value of the and the latter effect is more pronounced to the properties of v and n. Because the prospect equals n(p) v(x) + n(q) v(y). A than the former. Third, n(pq)/n(p) < value function is S-shaped, the value as- slightly different equation should be ap- n(pqv)/nQ?v)for all 0 < y, q, r 5 1. That sociated with a gain of $240 is greater plied if all outcomes of a prospect are on is, for any fixed probability ratio q, the than 24 percent of the value associated the same side of the zero point (5). ratio of decision weights is closer to with a gain of $1000, and the (negative) In prospect theory, outcomes are ex- unity when the probabilities are low value associated with a loss of $750 is pressed as positive or negative devia- than when they are high, for example, smaller than 75 percent of the value asso- tions (gains or losses) from a neutral ref- n(. l)/n(.2) > n(.4)/n(.8). A hypothetical ciated with a loss of $1000. Thus the erence outcome, which is assigned a val- weighting function which satisfies these shape of the value function contributes ue of zero. Although subjective values properties is shown in Fig. 2. The major to risk aversion in decision (i) and to risk differ among individuals and attributes, qualitative properties of decision weights seeking in decision (ii). Moreover, the we propose that the value function is can be extended to cases in which the underweighting of moderate and high commonly S-shaped, concave above the probabilities of outcomes are subjective- probabilities contributes to the relative reference point and convex below it, as ly assessed rather than explicitly given. attractiveness of the sure gain in (i) and illustrated in Fig. 1. For example, the dif- In these situations, however, decision to the relative aversiveness of the sure ference in subjective value between weights may also be affected by other loss in (ii). The same analysis applies to gains of $10 and $20 is greater than the characteristics of an event, such as am- problems 1 and 2. subjective difference between gains of biguity or vagueness (Y). Because (i) and (ii) were presented to- $110 and $120. The same relation be- Prospect theory, and the scales illus- gether, the respondents had in effect to tween value differences holds for the trated in Figs. 1 and 2, should be viewed choose one prospect from the set: A and corresponding losses. Another property as an approximate, incomplete, and sim- C, B and C, A and D, B and D. The most of the value function is that the response plified description of the evaluation of common pattern (A and D) was chosen to losses is more extreme than the re- risky prospects. Although the properties by 73 percent of respondents, while the sponse to gains. The displeasure associ- of v and n summarize a common pattern least popular pattern (B and C) was ated with losing a sum of money is gener- of choice, they are not universal: the chosen by only 3 percent of respondents. ally greater than the pleasure associated preferences of some individuals are not However, the combination of B and with winning the same amount, as is re- well described by an S-shaped value C is definitely superior to the combina- flected in people's reluctance to accept function and a consistent set of decision tion A and D, as is readily seen in prob- fair bets on a toss of a coin. Several stud- weights. The simultaneous measurement lem 4. ies of decision (3, 6) and judgment (7) of values and decision weights involves Problem 4 [N = 861. Choose between: have confirmed these properties of the serious experimental and statistical diffi- A & D. 25% chance to win $240, and value function (8). culties (10). 75% chance to lose $760. [0 per- The second major departure of pros- If n and v were linear throughout, the cent] pect theory from the expected utility preference order between options would B & C. 25% chance to win $250, and model involves the treatment of proba- be independent of the framing of acts, 75% chance to lose $750. 1100 per- cent] bilities. In expected utility theory the outcomes, or contingencies. Because of utility of an uncertain outcome is weight- the characteristic nonlinearities of n and When the prospects were combined ed by its probability; in prospect theory v, however, different frames can lead to and the dominance of the second option the value of an uncertain outcome is mul- different choices. The following three became obvious, all respondents chose tiplied by a decision weight n(p), which sections describe reversals of preference the superior option. The popularity of is a monotonic function of p but is not a caused by variations in the framing of the inferior option in problem 3 implies probability. The weighting function n acts, contingencies, and outcomes. that this problem was framed as a pair of SCIENCE, VOL. 211 separate choices. The respondents ap- The first stage of problem 6 yields the parently failed to entertain the possibility same outcome (no gain) for both acts. that the conjunction of two seemingly Consequently, we propose, people eval- reasonable choices could lead to an un- uate the options conditionally, as if the tenable result. second stage had been reached. In this The violations of dominance observed framing, of course, problem 6 reduces to in problem 3 do not disappear in the problem 5. More generally, we suggest presence of monetary incentives. A dif- that a decision problem is evaluated con- ferent group of respondents who an- ditionally when (i) there is a state in swered a modified version of problem 3, which all acts yield the same outcorne, with real payoffs, produced a similar pat- such as failing to reach the second stage tein of choices (11). Other authors have of the game in problem 6, and (ii) the Stated probability: p also reported that violations of the rules stated probabilities of other outcoines Fig. 2. A hypothetical weighting function. of rational choice, originally observed in are coiiditioiial on the nonoccurrence of hypothetical questioris, were not elimi- this state. nated by payoffs (12). The striking discrepancy betweell the We suspect that nlariy concu~rentde- Let us examine the structure of these responses to problems 6 and 7, which are cisions in the real world are framed inde- problems. First, note that problems 6 identical in outcomes and probabilities, pendently, and that the preference order and 7 are identical in terms of probabili- could be described as a pseudocertainty would often be reversed if the decisions ties and outcomes, because prospect C effect. The prospect yielding $30 is rela- were combined. The respondents in offers a .25 chance to win $30 and pros- tively more attractive in problem 6 than problem 3 failed to combine options, al- pect D offers a probability of .25 x in problem 7, as if it had the advantage of though the integration was relatively .80 = .20 to win $45. Consistency there- certainty. The sense of certainty associ- simple and was encouraged by instruc- fore requires that the same choice be ated with option C is illusory, however, tions (13). The complexity of practical made in problems 6 and 7. Second, note since the gain is in fact contingent on problems of concurrent decisions, such that problem 6 differs from problem 5 on- reaching the second stage of the game as portfolio selection, would prevent ly by the introduction of a preliminary (15). people from integrating options without stage. If the second stage of the game is We have observed the certainty effect computational aids, even if they were in- reached, then problem 6 reduces to prob- in several sets of problems, with out- clined to do so. lem 5; if the game ends at the first stage, comes ranging from vacation trips to the the decision does not affect the outcome. loss of human lives. In the negative do- Hence there seems to be no reason to main, certainty exaggerates the aversive- The Framing of Contingencies make a different choice in problems 5 ness of losses that are certain relative to and 6. By this logical analysis, problem 6 losses that are merely probable. In a The following triple of problems illus- is equivalent to problem 7 on the one question dealing with the response to an trates the framing of contingencies. Each hand and problem 5 on the other. The epidemic, for example, most respond- problem was presented to a different participants, however, responded simi- ents found "a sure loss of 75 lives" more group of respondents. Each group was larly to problems 5 and 6 but differently aversive than "80% chance to lose 100 told that one participant in ten, pre- to problem 7. This pattern of responses lives" but preferred "Im chance to lose selected at random, would actually be exhibits two phenomena of choice: the 75 lives" over "8% chance to lose 100 playing for money. Chance events were certainty effect and the pseudocertainty lives," contrary to expected utility theo- realized, in the respondents' presence, effect. ry. by drawing a single ball from a bag con- 'I'he contrast between problenls 5 and We also obtained the pseudocertainty taining a known proportion of balls of the 7 illustrates a phenomenon discovered effect in several studies where the de- winning color, and the winners were paid by Allais (14), which we have labeled the scription of the decision problerris fa- immediately. certainty effect: a reduction of the proba- vored conditional evaluation. Pseudo- bility of an outcome by a constant factor certainty can be induced either by a se- Problem 5 [N = 771: Which of the following options do you prefer'? has more impact when the outcome was quential formulation, as in problem 6, or A. a sure win of $30 [78 percent] initially certain than when it was merely by the introduction of causal contin- B. 80% chance to win $45 [22 percent] probable. Prospect theory attributes this gencies. In another version of the epi- effect to the properties of T. It is easy to demic problem, for instance, respond- Problem 6 [N = 851: Consider the following two.stage game. In the first stage, there is a verify, by applying the equation of pros- ents were told that risk to life existed on- 75% chance to end the game without winning pect theory to problems 5 and 7, that ly in the event (probability .lo) that the anything, and a 25% chance to move into the people for whom the value ratio v(30)l disease was carried by a particular virus. second stage. If you reach the second stage v(45) lies between the weight ratios Two alternative programs were said to you have a choice between: ~(.20)/~(.25)and ~(.80)/~(1.0)will pre- yield "a sure loss of 75 lives" or "80% C. a sure win of $30 [74 percent] fer A to B and F to E, contrary to ex- chance to lose 100 lives" if the critical D. 8% chance to win $45 [26 percent] pected utility theory. Prospect theory virus was involved, and no loss of life in Your choice must be made before the game starts, i.e., before the outcome of the first does not predict a reversal of preference the event (probability .90) that the dis- stage is known. Please indicate the option you for every individual in problems 5 and ease was carried by another virus. In ef- prefer. 7. It only requires that an individual who fect, the respondents were asked to Problem 7 [N = 811: Which of the following has no preference between A and B pre- choose between 10 percent chance of optiotns do you prefer? fer F to 6. For group data, the theory losing 75 lives and 8 percent chance of E. 25% chance to win $30 [42 percent] predicts the observed directional shift losing 100 lives, but their preferences P. 2Wh chance to win $45 [58 percent] of preference between the two problems. were the same as when the choice was 30 JANUARY 1981 between a sure loss of 75 lives and 80 provide is an illusion of conditional fram- ing of credit-card purchases, representa- percent chance of losing 100 lives. A ing. It appears that insurance is bought tives of the credit-card industry re- conditional framing was evidently as protection against worry, not only quested that the price difference be la- adopted in which the contingency of the against risk, and that worry can be ma- beled a cash discount rather than a noncritical virus was eliminated, giving nipulated by the labeling of outcomes credit-card surcharge. The two labels in- rise to a pseudocertainty effect.The cer- and by the framing ofcontingencies. It is duce differentreference points by implic- tainty effectreveals attitudes toward risk not easy to determine whether people itly designating as normal reference the that are inconsistent with the axioms of value the elimination of risk too much or higher or the lower ofthe two prices. Be- rational choice, whereas the pseudo- the reduction of risk too little. The con- cause losses loom larger than gains, con- certainty effect violates the more funda- trasting attitudes to the two forms ofpro- sumers are less willing to accept a sur- mental requirement that preferences tective action, however, are difficult to charge than to forego a discount. A simi- should be independent of problem de- justify on normative grounds (16). lar effect has been observed in scription. experimental studies of insurance: the Many significant decisions concern ac- proportion of respondents who preferred tions that reduce or eliminate the proba- The Framing of Outcomes a sure loss to a larger probable loss was bility of a hazard, at some cost. The significantly greater when the former shape of rr in the range of low probabili- Outcomes are commonly perceived as was called an insurance premium (19, ties suggests that a protective action positive or negative in relation to a refer- 20). which reduces the probability of a harm ence outcome that is judged neutral. These observations highlight the labil- from I percent to zero, say, will be val- Variations of the reference point can ity of reference outcomes, as well as ued more highly than an action that re- therefore determine whether a given out- their role in decision-making. In the ex- duces the probability of the same harm come is evaluated as a gain or as a loss. amples discussed so far, the neutral ref- from 2 percent to 1 percent. Indeed, Because the value function is generally erence point was identified by the label- probabilistic insurance, which reduces concave for gains, convex for losses, and ing of outcomes. A diversity of factors the probability of loss by half, is judged steeper for losses than for gains, shifts of determine the reference outcome in to be worth less than half the price of reference can change the value dif- everyday life. The reference outcome is regular insurance that eliminates the risk ference between outcomes and thereby usually a state to which one has adapted; altogether (3). reverse the preference order between it is sometimes set by social norms and It is often possible to frame protective options (6). Problems 1 and 2 illustrated expectations; it sometimes corresponds action in either conditional or uncon- a preference reversal induced by a shift to a level of aspiration, which may or ditional form. For example, an insurance of reference that transformed gains into may not be realistic. policy that covers fire but not flood could losses. We have dealt so far with elementary be evaluated either as full protection For another example, consider a per- outcomes, such as gains or losses in a against the specific risk of fire or as a re- son who has spent an afternoon at the single attribute. In many situations, how- duction in the overall probability of race track, has already lost $140, and is ever, an action gives rise to a compound property loss. The preceding analysis considering a $10 bet on a 15 :1 long shot outcome, which joins a series of changes suggests that insurance should appear in the last race. This decision can be in a single attribute, such as a sequence more attractive when it is presented as framed in two ways, which correspond of monetary gains and losses, or a set of the elimination of risk than when it is de- to two natural reference points. If the concurrent changes in several attributes. scribed as a reduction of risk. P. Slovic, status quo is the reference point, the out- To describe the framing and evaluation B. Fischhoff,and S. Lichtenstein, in an comes of the bet are framed as a gain of of compound outcomes, we use the no- unpublished study, found that a hypo- $140 and a loss of $10. On the other tion of a psychological account, defined thetical vaccine which reduces the prob- hand, it may be more natural to view the as an outcome frame which specifies (i) ability of contracting a disease from .20 present state as a loss of $140, for the the set of elementary outcomes that are to .10 is less attractive if it is described as betting day, and accordingly frame the evaluated jointly and the manner in effectivein half the cases than if it is pre- last bet as a chance to return to the refer- which they are combined and (ii)a refer- sented as fully effective against one of ence point or to increase the loss to $150. ence outcome that is considered neutral two (exclusive and equiprobable) virus Prospect theory implies that the latter or normal. In the account that is set up strains that produce identical symptoms. frame will produce more risk seeking for the purchase of a car, for example, In accord with the present analysis of than the former. Hence, people who do the cost of the purchase is not treated as pseudocertainty, the respondents valued not adjust their reference point as they a loss nor is the car viewed as a gift. full protection against an identified vi- lose are expected to take bets that they Rather, the transaction as a whole is rus more than probabilistic protection would normally find unacceptable. This evaluated as positive, negative, or neu- against the disease. analysis is supported by the observation tral, depending on such factors as the The preceding discussion highlights that bets on long shots are most popular performance of the car and the price of the sharp contrast between lay responses on the last race of the day (17). similar cars in the market. A closely re- to the reduction and the elimination of Because the value function is steeper lated treatment has been offered by Tha- risk. Because no form of protective ac- for losses than for gains, a differencebe- ler (18). tion can cover all risks to human welfare, tween options will loom larger when it is We propose that people generally all insurance is essentially probabilistic: framed as a disadvantage of one option evaluate acts in terms of a minimal ac- it reduces but does not eliminate risk. rather than as an advantage of the other count, which includes only the direct The probabilistic nature of insurance is option. An interesting example of such consequences of the act. The minimal commonly masked by formulations that an effect in a riskless context has been account associated with the decision to emphasize the completeness of pro- noted by Thaler (18). In a debate on a accept a gamble, for example, includes tection against identified harms, but the proposal to pass to the consumer some the money won or lost in that gamble and sense of security that such formulations of the costs associated with the process- excludes other assets or the outcome of SCIENCE, VOL. 211 previous gambles. People commonly other group (N = 88) the values shown consistencies were traced to the inter- adopt minimal accounts because this in brackets. action of two sets of factors: variations mode of framing (i) simplifies evaluation in the framing of acts, contingencies, and and reduces cognitive strain, (ii) reflects Problem 10: Imagine that you are about to outcomes, and the characteristic non- purchase a jacket for ($125) [$15], and a calcu- the intuition that consequences should lator for ($15) [$125]. The calculator salesman linearities of values and decision be causally linked to acts, and (iii) informs you that the calculator you wish to weights. The demonstrated effects are matches the properties of hedonic expe- buy is on sale for ($10) [$I201 at the other large and systematic, although by no rience, which is more sensitive to desir- branch of the store, located 20 minutes drive means universal. They occur when the away. Would you make the trip to the other able and undesirable changes than to store? outcomes concern the loss of human steady states. lives as well as in choices about money; There are situations, however, in The response to the two versions of they are not restricted to hypothetical which the outcomes of an act affect the problem 10 were markedly different: 68 questions and are not eliminated by mon- balance in an account that was pre- percent of the respondents were willing etary incentives. viously set up by a related act. In these to make an extra trip to save $5 on a $15 Earlier we compared the dependence cases, the decision at hand may be eval- calculator; only 29 percent were willing of preferences on frames to the depen- uated in terms of a more inclusive ac- to exert the same effort when the price of dence of perceptual appearance on per- count, as in the case of the bettor who the calculator was $125. Evidently the spective. If while traveling in a mountain views the last race in the context of ear- respondents do not frame problem 10 in range you notice that the apparent rela- lier losses. More generally, a sunk-cost the minimal account, which involves on- tive height of mountain peaks varies with effect arises when a decision is referred ly a benefit of $5 and a cost of some in- your vantage point, you will conclude to an existing account in which the cur- convenience. Instead, they evaluate the that some impressions of relative height rent balance is negative. Because of the potential saving in a more inclusive ac- must be erroneous, even when you have nonlinearities of the evaluation process, count, which includes the purchase of no access to the correct answer. Similar- the minimal account and a more in- the calculator but not of the jacket. By ly, one may discover that the relative at- clusive one often lead to different the curvature of v ,a discount of $5 has a tractiveness of options varies when the choices. greater impact when the price of the cal- same decision problem is framed in dif- Problems 8 and 9 illustrate another culator is low than when it is high. ferent ways. Such a discovery will nor- class of situations in which an existing A closely related observation has been mally lead the decision-maker to recon- account affects a decision: reported by Pratt, Wise, and Zeckhauser sider the original preferences, even when (21), who found that the variability of the there is no simple way to resolve the in- Problem 8 [N = 1831: Imagine that you prices at which a given product is sold by have decided to see a play where admission is consistency. The susceptibility to per- $10 per ticket. As you enter the theater you different stores is roughly proportional to spective effects is of special concern in discover that you have lost a $10 bill. the mean price of that product. The same the domain of decision-making because Would you still pay $10 for a ticket for the pattern was observed for both frequently of the absence of objective standards play? and infrequently purchased items. Over- such as the true height of mountains. Yes [88 percent] No [12 percent] all, a ratio of 2 :1 in the mean price of two The metaphor of changing perspective products is associated with a ratio of Problem 9 [N = 2001: Imagine that you can be applied to other phenomena of have decided to see a play and paid the admis- 1.86:1 in the standard deviation of the choice, in addition to the framing effects sion price of $10 per ticket. As you enter the respective quoted prices. If the effort with which we have been concerned here theater you discover that you have lost the that consumers exert to save each dollar (19).The problem of self-control is natu- ticket. The seat was not marked and the ticket cannot be recovered. on a purchase, for instance by a phone rally construed in these terms. The story Would you pay $10 for another ticket? call, were independent of price, the dis- of Ulysses' request to be bound to the Yes [46 percent] No [54 percent] persion of quoted prices should be about mast of the ship in anticipation of the ir- the same for all products. In contrast, resistible temptation of the Sirens' call is The marked difference between the re- the data of Pratt et al. (21) are consistent often used as a paradigm case (22). In sponses to problems 8 and 9 is an effect with the hypothesis that consumers this example of precommitment, an ac- of psychological accounting. We pro- hardly exert more effort to save $ I5 on a tion taken in the present renders inopera- pose that the purchase of a new ticket in $150 purchase than to save $5 on a $50 tive an anticipated future preference. An problem 9 is entered in the account that purchase (18). Many readers will recog- unusual feature of the problem of inter- was set up by the purchase of the original nize the temporary devaluation of money temporal conflict is that the agent who ticket. In terms of this account, the ex- which facilitates extra spending and re- views a problem from a particular tem- pense required to see the show is $20, a duces the significance of small discounts poral perspective is also aware of the cost which many of our respondents ap- in the context of a large expenditure, conflicting views that future perspectives parently found excessive. In problem 8, such as buying a house or a car. This will offer. In most other situations, deci- on the other hand, the loss of $10 is not paradoxical variation in the value of sion-makers are not normally aware of linked specifically to the ticket purchase money is incompatible with the standard the potential effects of different decision and its effect on the decision is accord- analysis of consumer behavior. frames on their preferences. ingly slight. The perspective metaphor highlights The following problem, based on ex- the following aspects of the psychology amples by Savage (2, p. 103) and Thaler Discussion of choice. Individuals who face a deci- (IN), further illustrates the effect of em- sion problem and have a definite prefer- bedding an option in different accounts. In this article we have presented a se- ence (i) might have a different preference Two versions of this problem were pre- ries of demonstrations in which seem- in a different framing of the same prob- sented to different groups of subjects. ingly inconsequential changes in the for- lem, (ii) are normally unaware of alterna- One group (N = 93) was given the val- mulation of choice problems caused sig- tive frames and of their potential effects ues that appear in parentheses, and the nificant shifts of preference. The in- on the relative attractiveness of options, 30 JANUARY 1981 457