THE ROLE OF PAST STATES IN DETERMINING REFERENCE POINTS FOR POLICY DECISIONS

Contextual influences are known to affect the reference position adopted by an individual when making a decision. However, little empirical evidence exists to show that such changes will result in predictable alterations in individuals′ expressed values for realistic policy alternatives. In this paper we present the results of five problem pairs that contrast otherwise identical options framed either in terms of a gain from the status quo or as the restoration of a previously experienced loss and one control problem pair for which such refraining was not possible. The results are significant and in the direction predicted by prospect theory. © 1993 Academic Press, Inc.