(when) Do Consumers Prefer Uncertainty? Consumers\u27 Reactions To Uncertain Advice And Uncertain Promotions

Research has shown that, although uncertainty is often disliked, consumers sometimes seem to prefer uncertainty to certainty. The goal of this dissertation is to further understand the circumstances under which consumers prefer, rather than dislike, uncertainty across different domains. In Chapter 1, we investigate preferences for uncertainty in the domain of advice giving. There is a widespread belief that advisees prefer, and thus reward, advisors who offer certainty, even for events that are inherently uncertain. In contrast, we find that consumers do not dislike, and sometimes prefer, uncertain advice. Specifically, they do not dislike advisors who express uncertainty by providing ranges of outcomes, giving numerical probabilities, or saying one event is “more likely” than another. In addition, when faced with an explicit choice, people are more likely to choose an advisor who provides uncertain advice over certain advice. In Chapter 2, we extend our investigation to preferences for uncertainty in the domain of price promotions. We test why and when consumers may prefer an uncertain price promotion, such as a 10% chance to get a product for free, to an equivalent sure discount. We find that uncertain price promotions are relatively more effective only when the equivalent sure discounts feel small. Specifically, we find that uncertain promotions are relatively more effective when the sure discounts are actually smaller, when the sure discounts are made to feel smaller by presenting them alongside a larger discount, and when the sure discounts are made to feel smaller by framing them as a percentage-discount rather than a dollar amount. This suggests that people’s preferences for uncertainty are more strongly tethered to their perceptions of the size of the sure outcome than they are to their perceptions of the probability of getting the uncertain reward. Taken together, this dissertation challenges long-held beliefs about how uncertainty affects consumers’ judgments and decisions and highlights the circumstances under which consumers prefer, rather than dislike, uncertainty

Social information and personal interests modulate neural activity during economic decision-making

In the present study we employed electrophysiological recordings to investigate the levels of processing at which positive and negative descriptions of other people bias social decision-making in a game in which participants accepted or rejected economic offers. Besides social information, we manipulated the fairness of the assets distribution, whether offers were advantageous or not for the participant and the uncertainty of the game context. Results show that a negative description of the interaction partner enhanced the medial frontal negativity (MFN) in an additive manner with fairness evaluations. The description of the partner interacted with personal benefit considerations, showing that this positive or negative information only biased the evaluation of offers when they did not favor the participant. P300 amplitudes were enhanced by advantageous offers, suggesting their heightened motivational significance at later stages of processing. Throughout all stages, neural activity was enhanced with certainty about the personal assignments of the split. These results provide new evidence on the importance of interpersonal information and considerations of self-interests relative to others in decision-making situations.Financial support to this research came from the Spanish Ministry of Science and Innovation through a “Ramón y Cajal” research fellowship (RYC-2008-03008) and grant PSI2010-16421 to María Ruz, and also from the European Commission through a “Leonardo da Vinci” fellowship (DE/10/LLP-LdV/PLM/282611) to Anna Moser