The Uncertain Value of Uncertainty: When Consumers are Unwilling to Pay for What They Like
42 Pages Posted: 27 Oct 2015 Last revised: 17 Jun 2018
Date Written: October 19, 2015
Do people have an irrational dislike for risk? People pay less for uncertain prospects than their worst possible outcomes (Gneezy, List, and Wu 2006), and researchers have come to accept that this effect occurs because people dislike risk. We challenge this assumption across six studies. Though people seem to dislike risk when preference is assessed with pricing measures, such as willingness-to-pay, people report liking uncertain prospects when preference is assessed using rating measures, time measures (e.g., anticipated time usage), and choice. We rule out alternative explanations and discuss crucial implications of our effects for both theory and application.
Keywords: Willingness-to-pay, Enjoyment, Uncertainty, Measurement
JEL Classification: M30, M31
Suggested Citation: Suggested Citation