HOW COGNITIVE BIAS SHAPE OUR CHOICE: THE EFFECT OF FIVE DIFFERENT FRAMING TYPES ON PREFERENCES

Abstract

Although the theories of physics and mathematics have brought a different perspective to economic modeling within the framework of certainty, they have failed to explain the complex structure of the human factor which is the cornerstone of the economy. With this situation, the relationship between economics, sociology and psychology has been discussed again since the mid-20th century. The end of the cast doubt on of the ?Rational Individual? understanding on the basis of Traditional Economics based on assumptions bounded by mathematics, it has led to the emergence of Behavioral and Experimental Economics based on the assumption of ?Limited Rationality?. It has been proved in many academic studies that individuals aren?t always rational and their preferences vary due to factors such as cognitive biases / brain defo. Framing Theory, which is one of the cognitive biases, forms the basis of the study. In this study, five different types of framing were used to observe the effect of presentation of the problem on individual decisions. There are very few studies in the literature that have differentiated according to framing types and this study is the first in the Turkish literature. The data were collected by convenience sampling method and online survey were answered by 172 people. According to Mann-Whitney U Test, it was found that the answers given to four of the five different scenarios differed in accordance with the expectation and these findings were statistically significant.