The Affect Heuristic and the Attractiveness of Simple Gambles

Ian Bateman, Sam Dent, Ellen Peters, Paul Slovic and Chris Starmer
Additional contact information
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

No 2006-18, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, 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.

Keywords: affect heuristic; preference construction; evaluability; gambles (search for similar items in EconPapers)
Date: 2006-09
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