Effects of labeling on risk taking in “leveling-up” decisions: ascending versus descending permutations and ending in terminal values

Haoyu Liu, Lifeng Yang () and Duane T. Wegener
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Haoyu Liu: SEM 310, ShanghaiTech University
Lifeng Yang: SEM 313, ShanghaiTech University
Duane T. Wegener: The Ohio State University

Marketing Letters, 2023, vol. 34, issue 1, No 9, 125-138

Abstract: Abstract Many decisions involve attempts to advance (level up) despite risk of losing what has already been gained. This research examined how permutations (ascending or descending sequences of level labels) and labels ending in terminal values of the sequence affect risk taking. Across three experiments using a “win-more-or-lose-it-all” game, participants made a series of decisions to level up or opt out and retain previously obtained chances to win. Consistent with hypotheses that approaching a terminal value in a sequence (such as a countdown sequence ending in 1) would make risk loom large, results consistently showed earlier opt-out decisions for descending permutations ending with a terminal value than for ascending sequences or descending sequences that did not end in a terminal value. Such tendencies were also stronger for numerical than for alphabetical labels (perhaps because of greater familiarity with countdown sequences in the numerical domain).

Keywords: Risk; Permutation; Level system; Gambler’s fallacy (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11002-022-09633-8

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