This study is based on the cognitive approach to psychology.

This approach focuses on

how we think. It assumes that our thought processes guide our behaviour. Decision
making is a prominent area of research in this approach. The study claims that a
change in reference point affects decision making. A change in reference point means a
change in perspective which a change in rationality,. Decision making is the process of
making a choice between two alternatives.

1. Decision making has 3 models – normative, descriptive and adaptive decision

making frame work
2. Normative describes an idealistic process of choosing between alternatives.
3. Descriptive models describe the realistic process of choosing between
alternatives
4. Adaptive decision maker framework
5. Heuristics shortcuts or incomplete simplifies strategies to make decisions
system 1: thinking is fast instinctive, emotional automatic, relatively unconscious
system 2: thinking is slower more analytical logical rule based and conscious

Kahenman and Tversky (1981) conducted an experiment on framing effect.

Participants were divided into two groups. Each of the participants was given a problem.
After reading the problem participants were asked to choose between two between two
alternatives. Participants in the first group had the alternatives described in terms of
potential gains. Their options consisted of the phrase will be saved.
Where as in group 2 options were described in terms of potential losses, their options
consisted of the phrase “will die”. The results showed that depending on whether
situation was described as potential gains or potential losses participants gave different
judgments. Participants had the tendency to avoid risks but take risks to avoid losses.

Since the options for both groups were rationally identical, the change in decision
cannot be explained using the utility theory. However this idea can be explained through
the prospect theory under descriptive models. This theory claims that individuals think of
utilities as changes from a reference point. This means that individuals don’t base their
decision purely on rationality; there are other things that affect it.
Aim to investigate the influence of the way a problem is framed for an individual to make a
decision. The independent variable will be reference point that is whether options are framed in
terms of potential gains (“will be saved”) or potential losses (“will die”). The dependent variable
is their decision that is whether participants pick program A or program B.
It's estimated that the average adult makes about 35,000 decisions a day, (EXPLAIN
WHY INVETIGATION IS IMPORTANT)

Nul hypothesis: A significant difference in decisions will not be seen as a result of a

change in reference point
Hypothesis: A significant difference in decisions will be seen as a result of a change in
reference point

Exploration

Independent measures was used so both groups has identical experiment conditions
and hence higher internal validity. Additionally confounding variables between both
group cancel each other out again increasing internal validity. Repeated measures
didn’t suit this experiment as (figuring our the true aim and that rationally problems were
identically and only phrases were changed )

Convenience sampling was used as it was easy and not time consuming.(