The focus of the thesis is on psychological effects in decision making with an emphasis on cognitive biases that influence the final decision in risky environment. In the context of management decision making, a certain level of risk is almost always included in the process. Making decision in risky conditions in even more challenging due to additional stress and lack of information (implying higher uncertainty), and managers tend to apply trial and error method. In such situations, it is important to be aware of all the factors that influence final decision in order to reduces the effect of all factors that may be misleading. Cognitive bias that has been examined in the thesis is framing effect in risky conditions. Framing effect in risky conditions implies emphasizing positive or negative aspects of a safe option outcome or a risky option outcome. As a result one can expect that the risky options will be chosen more often by the respondents that have been presented with negatively framed versions, than by the ones who have been presented with the positively framed versions. The main goal of the research was to examine to what extent the framing effect influence the evaluations of the respondents. The main questions are 1) will the respondents affected by positively framed versions prefer safe (riskless option) in which the emphasis is on safe gains, without any possible losses, and 2) will the respondents in negatively framed versions prefer more risky options to avoid guaranteed losses. Generally speaking, more people are leaning towards choosing a risky option to avoid losses, than to achieve gains. It should be noted that the framing effect that decision maker adopts is partially determent by the way problem has been formulated and also partially by respondents personal characteristics and biases. These factors define the reference point from which the problem is approached.