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The Affect Heuristic and the Attractiveness of Simple Gambles

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Author Info

  • Ian Bateman

    (Centre for Social and Economic Research on the Global Environment, University of East Anglia)

  • Sam Dent

    (Centre for Social and Economic Research on the Global Environment, University of East Anglia)

  • Ellen Peters

    (Decision Research, Eugene, Oregon)

  • Paul Slovic

    (Department of Psychology, University of Oregon)

  • Chris Starmer

    (CeDEx, University of Nottingham)

Abstract

Prior studies have observed that the attractiveness of playing a simple gamble (7/36 to win $9; otherwise win nothing) is greatly enhanced by introducing a small loss (7/36 win $9; otherwise lose 5¢). The present studies tested and confirmed an explanation of this finding based on the concept of evaluability and the affect heuristic. Evaluators of the “noloss” gamble lack a precise feeling for how good $9 is, hence give it little weight in their judgment. In the second gamble, comparison with the small loss makes $9 “come alive with feeling” and become weighted in the judgment, thus increasing the attractiveness of the gamble. These results demonstrate the importance of contextual factors in determining affect and preference for simple risk-taking opportunities. They show that the meaning, utility, and weighting of even a very familiar monetary outcome such as $9 is not fixed, but depends greatly on these contextual factors.

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Bibliographic Info

Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2006-18.

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Date of creation: Sep 2006
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Handle: RePEc:not:notcdx:2006-18

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Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
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Web page: http://www.nottingham.ac.uk/economics/cedex/
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Related research

Keywords: affect heuristic; preference construction; evaluability; gambles;

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Cited by:
  1. Varsha Singh & Azizuddin Khan, 2009. "Heterogeneity in choices on Iowa Gambling Task: preference for infrequent–high magnitude punishment," Mind and Society: Cognitive Studies in Economics and Social Sciences, Fondazione Rosselli, vol. 8(1), pages 43-57, June.
  2. Rex Labao & Herminia Francisco & Dieldre Harder & Florence Santos, 2008. "Do Colored Photographs Affect Willingness to Pay Responses for Endangered Species Conservation?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(2), pages 251-264, June.

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