Recency and Reference Point Formation: the Effect on Risky Choice Behavior

George Wu, University of Chicago, USA
Michael Yeomans, University of Chicago, USA
We test whether the order in which participants learn the outcomes of a gamble affects risk-preferences. In 2 studies, participants are more likely to choose a risky gamble when outcomes are revealed in an ascending rather than descending order. We suggest that the most recent outcome serves as a reference point.
[ to cite ]:
George Wu and Michael Yeomans (2012) ,"Recency and Reference Point Formation: the Effect on Risky Choice Behavior", in NA - Advances in Consumer Research Volume 40, eds. Zeynep G├╝rhan-Canli, Cele Otnes, and Rui (Juliet) Zhu, Duluth, MN : Association for Consumer Research, Pages: 284-287.