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Home » Is there neglect of low probability gains?
Economy

Is there neglect of low probability gains?

October 6, 2022No Comments1 Min Read
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Seven pre-recorded studies (NOT = 2,890, adult participants) conducted in the field, in the laboratory and online. Documented opportunity neglect: A tendency to reject opportunities with a low probability of success, even when they present themselves with little or no objective cost (e.g., time, money, reputation). Participants rejected a low-probability opportunity in an everyday context (Study 1). Participants also rejected incentive-compatible bets with positive expected value—both for goods (Study 2) and money (Study 3–7)—even without the possibility of monetary loss and non-negligible rewards ( for example, a 1% chance at $99). Participants rejected low-probability opportunities more frequently than high-probability opportunities with equal expected value (Study 3). Although there are costs associated with seizing some real opportunities, we show that people are even willing to incur costs to exit low-probability opportunities (Study 4). Opportunity neglect can be mitigated by emphasizing that rejecting an opportunity is tantamount to choosing a zero probability of success (studies 6-7).

It’s from new search by Emily Prinsloo, Kate Barasz and Michael I. Norton, via the excellent Kevin Lewis.


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