The difference between $15 and $10 seems greater than the difference between $125 and $120.This is an example of:
A) base-rate neglect.
B) framing effects.
C) subjective probability.
D) subjective utility.

Question

Quizplus · Accepted Answer

This phenomenon is an example of subjective utility, where the perceived value or utility of money changes depending on the context or amount. The difference of $5 feels more significant when comparing lower amounts ($15 vs. $10) than when comparing higher amounts ($125 vs. $120), illustrating how the same absolute difference can have different perceived values or utilities depending on the context.

The Difference Between $15 and $10 Seems Greater Than the Difference