Less Likely Outcomes Are Valued Less

Gabriele Paolacci, Erasmus University Rotterdam, The Netherlands
Joachim Vosgerau, Bocconi University, Italy
Most models of decision making under risk assume that a prospect’s outcome is valued independent of the outcome’s likelihood to occur. In violation of this assumption, we show that consumers value outcomes (gains and losses) less the less likely they are to occur which can lead to preference reversals.
[ to cite ]:
Gabriele Paolacci and Joachim Vosgerau (2015) ,"Less Likely Outcomes Are Valued Less", in NA - Advances in Consumer Research Volume 43, eds. Kristin Diehl and Carolyn Yoon, Duluth, MN : Association for Consumer Research, Pages: 265-269.