Is the Preference for Certainty Always So Certain? Why Differentiating Details Increases Risk Tolerance and Decreases Uncertainty Aversion

Posted: 5 Oct 2011 Last revised: 10 Mar 2017

Kristen Duke

University of California, San Diego (UCSD) - Rady School of Management

Kelly Goldsmith

Northwestern University - Kellogg School of Management

On Amir

University of California, San Diego (UCSD) - Rady School of Management

Date Written: March 8, 2017

Abstract

Academic research across a variety of disciplines has demonstrated that consumers generally show a preference for certainty and an aversion to risk in the domain of gains. In the current research, we provide evidence for an important, and previously unconsidered, psychological antecedent to these effects. Specifically, we find that the likelihood of choosing a certain reward (e.g., $100) over a comparatively risky, uncertain reward with a greater expected value (e.g., an option offering an 89% chance of receiving $100, a 10% chance of receiving $500, and a 1% chance of receiving $0) is affected by individuals’ tendency to attend to the overall “gist” of the choice options, as opposed to their associated details. Across five experiments, we find that factors that shift attention to the “gist” of the choice options accentuate the preference for certainty. We provide convergent support using a variety of different means to shift consumers’ attention to the “gist” (vs. the details) of their choices, and demonstrate that individual differences in the tendency to attend to details can moderate this effect. In doing so, our findings offer novel insights into when consumers are more (vs. less) likely to show a preference for certainty and an aversion to risk in common, retail settings.

Keywords: uncertainty, risk, the preference for certainty, processing style

Suggested Citation

Duke, Kristen and Goldsmith, Kelly and Amir, On, Is the Preference for Certainty Always So Certain? Why Differentiating Details Increases Risk Tolerance and Decreases Uncertainty Aversion (March 8, 2017). Available at SSRN: https://ssrn.com/abstract=1938787 or http://dx.doi.org/10.2139/ssrn.1938787

Kristen E. Duke

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Kelly Goldsmith (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/goldsmith/htm/

On Amir

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States
858-534-2023 (Phone)
858-534-0745 (Fax)

HOME PAGE: http://management.ucsd.edu/faculty/directory/amir/

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