On the Antecedents of Uncertainty Aversion

Abstract

A great deal of academic research across a variety of disciplines has demonstrated that consumers generally show a preference for certainty in the domain of gains. In the current research, we provide evidence for an important, and previously unconsidered, psychological antecedent to this effect. Specifically, we find that the likelihood of choosing a certain reward (e.g., $100) over an uncertain reward with a greater expected value (e.g., an option offering an 89% chance of receiving $100, a 10% chance of receiving $500, and a 1% chance of receiving $0) is affected by how those choices are cognitively represented. Across five experiments, we find that forming a global (vs. local) representation of the choice options accentuates (vs. attenuates) the preference for certainty. We test for this result using manipulations of mental representation that vary organically in the marketplace, such as features inherent to the choice outcomes (e.g., the monetary value of the potential gains), exogenous influences (e.g., time pressure), and individual differences (e.g., cognitive reflection). In doing so, our findings offer novel insights into when consumers are more (vs. less) likely to show a preference for certainty in common, retail settings.