The idea that as preferences change when reference points related to those preferences change is known as what concept?
A)Reference dependence
B)Preference reversal
C)The framing effect
D)The base rate
E)Invariance principle

Question

Quizplus · Accepted Answer

Reference dependence refers to the idea that people's preferences can change based on the reference point or comparison standard. For example, a person may be willing to pay more for a product if they see a higher price first, but less if they see a lower price first. This concept is central to prospect theory, which explains how people make decisions under uncertainty.

The Idea That as Preferences Change When Reference Points Related