Uncertain Outcomes are Valued Less than Certain Outcomes.
Intervenant : Gabriele Paolacci
Associate Professor of Marketing at Rotterdam School of Management, Erasmus University.
Title: Uncertain Outcomes are Valued Less than Certain Outcomes.
Zoom link: https://hec-fr.zoom.us/j/97403313734
Most theories of decision‐making under risk assume that payoffs and probabilities are separable: The subjective value of a prospective outcome (the payoff) is assumed to be independent of the likelihood that the outcome will occur (the probability). In violation of this assumption, we show that people anticipate less utility from uncertain outcomes than from certain outcomes. Our results suggest that this effect does not simply reflect an aversion toward “weird” transactions: Instead, we argue that hypothetical outcomes are perceived as psychologically distant, which leads to muted reactions towards their utility. Finally, we show that our findings cast a new light on the phenomenon of risk aversion, and offer a solution to the paradoxical “uncertainty effect,” whereby a risky prospect is valued less than its worst possible realization.
Dr. Gabriele Paolacci is an Associate Professor of Marketing at Rotterdam School of Management, Erasmus University. He joined RSM after graduate studies at Ca' Foscari University of Venice (where he got his PhD) and at Ross School of Business, University of Michigan (where he was a visiting scholar). Gabriele’s research investigates substantive and methodological questions in behavioral research. Within the substantive domain, he conducts research in the field of consumer judgment and decision‐making. In particular, he studies how people’s decisions seemingly contradict the assumptions and prescriptions of rational choice theory. He also conducts empirical research on the practice of online data collection in the behavioral sciences. He has investigated whether crowdsourced samples (e.g., MTurk workers) provide data of high quality, and how to attenuate their distinctive threats to experimental validity (e.g., nonnaive participants, study impostors).