← all facts
decision making
You prefer a smaller reward that is certain.
Research shows people systematically choose lower-value, certain rewards over higher-value options involving uncertainty.
The mere presence of uncertainty triggers a disproportionate avoidance response. This happens even when the expected value of the uncertain option is mathematically higher. We view the 'unknown' as a cost that must be deducted from the reward.
Your aversion to the unknown costs you more than you realize.
Where this comes from
- Study
- Gneezy, List, & Wu, 2006, Quarterly Journal of Economics
- What the check found
- Gneezy, List, and Wu (2006) did publish this study in the QJE. While the effect is well-documented in behavioral economics, the magnitude is frequently debated and subject to replication variability.
- Confidence
- Solid, with limits
Related
One of these every day, and every one names the study it came from. When a finding is contested, it says so.