Choosing the sure gain and the sure loss: uncertainty avoidance and the reflection effect

2014 ◽  
Vol 31 (5) ◽  
pp. 351-359 ◽  
Author(s):  
Subimal Chatterjee ◽  
Gizem Atav ◽  
Junhong Min ◽  
David Taylor
Keyword(s):  
Prospect Theory ◽  
Uncertainty Avoidance ◽  
Reflection Effect ◽  
Marketing Practice ◽  
Content Type ◽  
Individual Level ◽  
Simultaneous Choice ◽  
Level Scale ◽  
Probability Number ◽  
Gains And Losses

Purpose – The paper aims to investigate the role of uncertainty avoidance (UA) as a moderator of Prospect Theory’s reflection effect (i.e. the simultaneous choice of a sure gain and a risky loss). We expect that higher-UA consumers, seeking certainty, will shun risk across both gains and losses such that their choices will be inconsistent with the reflection effect. Design/methodology/approach – We report three studies in which participants choose between risk and certainty. We use the stimuli from the original Prospect Theory paper, measure UA using an individual-level scale and conduct controlled experimental (laboratory) studies. Findings – We show that, compared to lower-UA consumers, higher-UA consumers demonstrate the reflection effect less frequently in a variety of settings (small/large stakes and within/between subjects comparisons). Mediation tests reveal that higher-UA consumers anchor on the sure loss and stay with their choice because they prefer the certainty of the sure (smaller) loss to the possibility of a possible (larger) loss (a dual-mediation mechanism). Research limitations/implications – The results have important implications for marketing practice. They show that quantifying uncertainty into a probability number is not enough to eliminate the uncertainty of the situation, and that UA is likely serve as a boundary condition to many of the traditional heuristics of judgment and decision-making. Originality/value – This is the first paper to demonstrate that UA can moderate the reflection effect (using the stimuli in the original Prospect Theory paper). Therefore, it sets an agenda for future researchers who may want to use these findings to calibrate price/uncertainty tradeoffs within higher-UA segments.

Risk and ambiguous choices: individual versus groups, an experimental analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Divya Aggarwal ◽  
Uday Damodaran ◽  
Pitabas Mohanty ◽  
D. Israel
Keyword(s):  
Design Methodology ◽  
Ambiguity Aversion ◽  
Group Level ◽  
Content Type ◽  
Individual Level ◽  
Real World Applications ◽  
Ambiguity Attitudes ◽  
The Individual ◽  
Normative Models ◽  
Gains And Losses

PurposeThis study examines individual ambiguity attitudes alone and in groups by leveraging the descriptive model of anchoring and adjustment on decision-making under ambiguity. The study extends Ellsberg's probability ambiguity to outcome ambiguity and examines decisions made under both ambiguities, at different likelihood levels and under the domain of gains and losses.Design/methodology/approachThe methodology selected for this study is a two-stage within-subject lab experiment, with participants from different Indian universities. Each participant made 12 lottery decisions at the individual level and at individuals in the group level.FindingsThe results show that ambiguity attitudes are not universal in nature. Ambiguity seeking as a dominant choice was observed at both the individual level and at individual in the group level. However, the magnitude of ambiguity seeking or ambiguity aversion contingent upon the domain of gains and losses differed widely across the individual level and at individuals in the group level.Research limitations/implicationsThe study enables to contribute toward giving a robust descriptive explanation for individual behavior in real-world applications of finance. It aims to provide direction for theoretical normative models to accommodate heterogeneity of ambiguity attitudes.Originality/valueThe study is novel as it examines a two-dimensional approach by representing ambiguity in probability and in outcomes. It also analyzes whether decisions under ambiguity vary when individuals make decisions alone and when they make it in groups.

How cultural differences in uncertainty avoidance affect product perceptions

2007 ◽  
Vol 24 (3) ◽  
pp. 330-349 ◽  
Author(s):  
Julie Anne Lee ◽  
Ellen Garbarino ◽  
Dawn Lerman
Keyword(s):  
Large Scale ◽  
Uncertainty Avoidance ◽  
Diverse Range ◽  
Content Type ◽  
Behavioural Intentions ◽  
Individual Level ◽  
Quality Perceptions ◽  
The Usa ◽  
Large Scale Survey ◽  
Highly Correlated

PurposeTo examine how people from countries that vary in uncertainty avoidance (UA) use information about product uncertainty when evaluating products.Design/methodology/approachTwo studies were conducted that vary in methodology, sampling and analysis. First, an experiment was designed to manipulate product uncertainty through the use of country of origin (COO) quality‐stereotypes. It was administered to university students from a diverse range of countries, all studying in the USA. Next, data from a large‐scale survey of consumers from ten countries was submitted to hierarchical binary regression analyses to include variables at the country and individual level.FindingsThe studies support an interaction between product uncertainty (PU) and cultural UA on quality perceptions and behavioural intentions. Consumers from high UA countries evaluated high PU offerings less positively and held weaker behavioural intentions than those from low UA countries, but for low PU offerings, no difference was found. The effect of UA was reduced for people with more experience and those who were younger.Research limitations/implicationsAlthough we isolated the effects of UA from other cultural and individual level variables, it would be useful to directly cross individualism with UA in an experimental design, as these two variables are highly correlated.Practical implicationsThis study suggests products with higher levels of PU will have more opportunity to prove themselves in low uncertainty cultures.Originality/valueThis study should be valuable for marketing managers devising rollout strategies for products with higher levels of PU or weaker quality stereotypes.

Social network behavior inappropriateness: the role of individual-level espoused national cultural values

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manjul Gupta
Keyword(s):  
Social Network ◽  
Cultural Values ◽  
Power Distance ◽  
Interdisciplinary Approach ◽  
The United States ◽  
Uncertainty Avoidance ◽  
Network Behavior ◽  
Content Type ◽  
Individual Level

PurposeThe purpose of the current study is to investigate the effects of individual-level (espoused) cultural values (collectivism, power distance, uncertainty avoidance, masculinity and long-term orientation) on the individuals' acceptability of inappropriate social network behaviors.Design/methodology/approachThe study employs survey data collected from 482 social network users (261 in the United States and 221 from India).FindingsResults show that individuals with high power distance, masculinity and long-term oriented cultural values are more accepting of inappropriate social network behaviors of others, while those with strong uncertainty avoidance cultural values have high degree of social network behavior inappropriateness, which is defined as the extent to which behaviors of social network users are considered unacceptable by others.Research limitations/implicationsThe paper highlights the need for more academic research on the intersection of culture and social network behaviors. This study emphasizes the need for adopting an interdisciplinary approach to understand individuals' social network behaviors.Practical implicationsThe paper offers recommendations to global organizations pertaining to the need for creating social network policies in such a way that encourages their global workforce to openly, yet respectfully, share their ideas using social networks.Originality/valueUsing an interdisciplinary approach, the present study extends our understanding of a recently proposed social network behavioral inappropriateness construct and explains how differences in cultural values may lead to differences in individuals' social network behaviors.

The role of individual cultural traits and proactivity in an organizational setting

2014 ◽  
Vol 37 (4) ◽  
pp. 348-366 ◽  
Author(s):  
Kerry D. Carson ◽  
David S. Baker ◽  
Patricia A. Lanier
Keyword(s):  
Negative Impact ◽  
Uncertainty Avoidance ◽  
Equation Modeling ◽  
Proactive Behavior ◽  
Content Type ◽  
Individual Level ◽  
Cultural Traits ◽  
Proactive Behaviors ◽  
The Individual ◽  
The Impact

Purpose – The purpose of this research is to assess the impact of espoused individual cultural traits on proactive behaviors within an organizational environment. While there have been many reports about the positive outcomes of proactivity, there is much less known about the antecedents, particularly those related to culture. Design/methodology/approach – Sales employees (n=147) in a multi-national organization from Australia, Canada, New Zealand, the UK, and the USA were surveyed to assess the impact of cultural trait influences on proactive behavior at the individual level. Using linear regression and partial least squares structural equation modeling, three independent variables were found to be significant antecedents to proactive behavior. Findings – Long-term orientation positively influenced proactive behaviors as did uncertainty avoidance. Uncertainty avoidance was hypothesized to have a negative impact on proactive behaviors, but the results of this study implied that individuals found it safer to adjust to a fluid environment rather than to remain inflexible. No relationship was found between power distance and proactivity. Masculinity was found to be positively related to proactive behaviors but collectivism was not. Research limitations/implications – The results of this study should be limited to its own population and not generalized to larger, more culturally diverse populations which were not represented in the sample. Practical implications – This study provides better understanding of managerial proactive behavior related to cultural traits, particularly in the domain of field sales. Originality/value – This study is unique in that it explores individual proactivity in an organizational selling environment related to cultural traits at the individual level.

scholarly journals Gain-loss asymmetry in human experiential tasks

2021 ◽  
Author(s):  
◽  
Rana Asgarova
Keyword(s):  
Risk Aversion ◽  
Prospect Theory ◽  
Local Level ◽  
General Pattern ◽  
Variable Interval ◽  
Probability Discounting ◽  
Reflection Effect ◽  
Risk Seeking ◽  
Gain Loss ◽  
Gains And Losses

<p>Prospect Theory models behaviour in one-off decisions where outcomes are described. Prospect Theory describes risk aversion when the choice is between gains and risk seeking when the choice is between losses. This asymmetry is known as the reflection effect. In choices about experienced outcomes, individuals show risk seeking for gains and risk aversion for losses. This change in the direction of gain-loss asymmetry is known as the description-experience gap. Across eight experiments, we examined gain-loss asymmetry in two experiential choice procedures. We compared the obtained results with predictions derived from Prospect Theory and the description-experience gap literature.  In Study 1, we evaluated the predictions of the reversed reflection effect in probability discounting. Probability discounting is loss in reinforcer value as a function of uncertainty. In typical tasks measuring discounting, participants choose between smaller, certain amounts and a larger amount at one of several probabilities. In choice from description, most participants show a gain-loss asymmetry consistent with the predictions of the reflection effect, discounting gains more steeply than losses. Across three experiments, we examined whether gain-loss asymmetry also occurred when participants experienced the outcomes they chose, when they chose between two uncertain options, and when these two contexts were combined. Across all of the above contexts, no consistent mean difference in discounting of gains and losses was observed. Rather, in most of the tasks that provided experienced outcomes, the participants showed steeper discounting in the first condition completed, whether it involved choices about gains or losses. Furthermore, subsequent conditions produced shallower discounting, but notably, not shallower than choice based on the expected value of the options. In Studies 2 and 3, we followed-up on this order effect by providing the participants with experience of probabilistic outcomes before the discounting tasks. Participants discounted losses more steeply than gains, consistent with the predictions of a reversed reflection effect.  In Study 2, we examined gain-loss asymmetry in a rapid-acquisition choice procedure using concurrent variable-interval schedules – the Auckland Card Task. Participants repeatedly chose between two decks of cards that varied in the frequency or magnitude of available gains or losses. Participants were more sensitive to changes in gain than loss frequency between the two decks, consistent with the predictions of a reversed reflection effect, while sensitivity to gain and loss magnitude did not show an asymmetry. We found a novel asymmetry in the local effects of gains and losses. In the frequency tasks, gains disrupted the general pattern of responding more than losses. In the magnitude tasks, varying the magnitude of losses had a bigger effect on local-level patterns following outcomes than varying the magnitude of gains.  Across the two tasks we observed patterns of gain-loss asymmetry consistent with the predictions of a reversed reflection effect. We also observed several inconsistencies, particularly when comparing behaviour to choices that would maximize the expected returns. Our research suggested that sufficient exposure to chance outcomes and ensuring delivery of scheduled events are key challenges in further refinement of experiential choice in human operant tasks.</p>

Viewpoint – a big opportunity for interactive marketing post-COVID-19

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Malcolm McDonald
Keyword(s):  
New Technology ◽  
Fixed Costs ◽  
Interactive Marketing ◽  
Marketing Practice ◽  
Content Type ◽  
Building Relationships ◽  
Individual Level ◽  
The People ◽  
Customer Services ◽  
The Individual

PurposeThe objective of this short research-informed, practitioner-orientated paper is to provide a viewpoint on interactive marketing pre and post COVID-19.Design/methodology/approachThis is a conceptual article designed to articulate a viewpoint that despite COVID-19 the strategic considerations that marketers need to make remain unchanged.FindingsAs a result of the pandemic, there is much more obvious use of interactivity in other, aligned functions such as sales and customer services. The effectiveness of interactive marketing will only be increased by having focus on the fundamental roles of the marketing discipline, strategy and segmentation, and understanding customers at the individual level. We also need reminding briefly that the rules of competition had changed well before the COVID-19 pandemic. The traditional make and sell model has been substantially replaced by new technology-enabled organisations without the restrictions of high fixed costs and cloying bureaucracy. Customers can now search for and evaluate products and services independent of suppliers and now have as much information about suppliers as suppliers have of customers. This is the backcloth against which marketers face the challenges at the beginning of 2021. We conclude that there is a great future ahead. There is no reason why the best of interactive marketing will not be capable of building relationships that are great for customers, great for the people who create them, great for all stakeholders and great for the environment.Originality/valueThis is a practitioner viewpoint outlining the view that COVID-19 has not had as great of an impact on interactive marketing practice as technological change has and that interactive marketing will continue to develop after COVID-19 has receded.

scholarly journals Gain-loss asymmetry in human experiential tasks

2021 ◽  
Author(s):  
◽  
Rana Asgarova
Keyword(s):  
Risk Aversion ◽  
Prospect Theory ◽  
Local Level ◽  
General Pattern ◽  
Variable Interval ◽  
Probability Discounting ◽  
Reflection Effect ◽  
Risk Seeking ◽  
Gain Loss ◽  
Gains And Losses

<p>Prospect Theory models behaviour in one-off decisions where outcomes are described. Prospect Theory describes risk aversion when the choice is between gains and risk seeking when the choice is between losses. This asymmetry is known as the reflection effect. In choices about experienced outcomes, individuals show risk seeking for gains and risk aversion for losses. This change in the direction of gain-loss asymmetry is known as the description-experience gap. Across eight experiments, we examined gain-loss asymmetry in two experiential choice procedures. We compared the obtained results with predictions derived from Prospect Theory and the description-experience gap literature.  In Study 1, we evaluated the predictions of the reversed reflection effect in probability discounting. Probability discounting is loss in reinforcer value as a function of uncertainty. In typical tasks measuring discounting, participants choose between smaller, certain amounts and a larger amount at one of several probabilities. In choice from description, most participants show a gain-loss asymmetry consistent with the predictions of the reflection effect, discounting gains more steeply than losses. Across three experiments, we examined whether gain-loss asymmetry also occurred when participants experienced the outcomes they chose, when they chose between two uncertain options, and when these two contexts were combined. Across all of the above contexts, no consistent mean difference in discounting of gains and losses was observed. Rather, in most of the tasks that provided experienced outcomes, the participants showed steeper discounting in the first condition completed, whether it involved choices about gains or losses. Furthermore, subsequent conditions produced shallower discounting, but notably, not shallower than choice based on the expected value of the options. In Studies 2 and 3, we followed-up on this order effect by providing the participants with experience of probabilistic outcomes before the discounting tasks. Participants discounted losses more steeply than gains, consistent with the predictions of a reversed reflection effect.  In Study 2, we examined gain-loss asymmetry in a rapid-acquisition choice procedure using concurrent variable-interval schedules – the Auckland Card Task. Participants repeatedly chose between two decks of cards that varied in the frequency or magnitude of available gains or losses. Participants were more sensitive to changes in gain than loss frequency between the two decks, consistent with the predictions of a reversed reflection effect, while sensitivity to gain and loss magnitude did not show an asymmetry. We found a novel asymmetry in the local effects of gains and losses. In the frequency tasks, gains disrupted the general pattern of responding more than losses. In the magnitude tasks, varying the magnitude of losses had a bigger effect on local-level patterns following outcomes than varying the magnitude of gains.  Across the two tasks we observed patterns of gain-loss asymmetry consistent with the predictions of a reversed reflection effect. We also observed several inconsistencies, particularly when comparing behaviour to choices that would maximize the expected returns. Our research suggested that sufficient exposure to chance outcomes and ensuring delivery of scheduled events are key challenges in further refinement of experiential choice in human operant tasks.</p>

Community-based disaster communication: how does it become trustworthy?

2016 ◽  
Vol 25 (4) ◽  
pp. 478-491 ◽  
Author(s):  
Dwie Irmawaty Gultom
Keyword(s):  
Disaster Response ◽  
Information Diffusion ◽  
Weak Ties ◽  
Network Ties ◽  
Community Based ◽  
Strong Ties ◽  
Content Type ◽  
Individual Level ◽  
Disaster Communication ◽  
Disaster Information

Purpose – Trust in disaster communication is significant because a lack of trust will prevent the transformation of information into usable knowledge for an effective disaster response. Therefore, the purpose of this paper is to investigate how the culture and network ties of an affected community can encourage trust and participation in disaster communication. Design/methodology/approach – A qualitative case study of Jalin Merapi (JM) was conducted by interviewing 33 research participants in the Mt Merapi surroundings. Findings – The findings indicate that culture-embedded disaster communication plays important roles in increasing the effectiveness of disaster information and encouraging trust in the authenticity of locally based disaster information at the individual level. The findings also identify that strong ties and weak ties play different roles in disaster communication. The strong ties are more effective in facilitating information diffusion and encourage trust and community participation within the affected community. Furthermore, the weak ties are more effective in disseminating information to wider audiences, and have an indirect influence in encouraging trust by extending the offline social network owned by the affected community. Originality/value – Most literature on disaster communication focusses on the construction of disaster messages to encourage effective disaster response. Less attention has been paid to the information receivers regarding how disaster information is considered to be trustworthy by the affected community and how it can increase collective participation in community-based disaster communication.

Examination of customer-centric measures among different types of customers in the context of major Canadian ski resort

2018 ◽  
Vol 30 (2) ◽  
pp. 438-459
Author(s):  
Matti J. Haverila ◽  
Kai Christian Haverila
Keyword(s):  
Customer Satisfaction ◽  
Structural Equation ◽  
A Priori ◽  
Equation Modeling ◽  
Marketing Practice ◽  
Content Type ◽  
Ski Resort ◽  
Different Types ◽  
Managerial Implications ◽  
Satisfaction Model

Purpose Customer-centric measures such as customer satisfaction and repurchase intent are important indicators of performance. The purpose of this paper is to examine what is the strength and significance of the path coefficients in a customer satisfaction model consisting of various customer-centric measures for different types of ski resort customer (i.e. day, weekend and ski holiday visitors as well as season pass holders) in a ski resort in Canada. Design/methodology/approach The results were analyzed using the partial least squares structural equation modeling approach for the four different types ski resort visitors. Findings There appeared to differences in the strength and significance in the customer satisfaction model relationships for the four types of ski resort visitors indicating that the a priori managerial classification of the ski resort visitors is warranted. Originality/value The research pinpoints differences in the strength and significance in the relationships between customer-centric measures for four different types ski resort visitors, i.e. day, weekend and ski holiday visitors as well as season pass holders, which have significant managerial implications for the marketing practice of the ski resort.

The value of sociality

foresight ◽  
2014 ◽  
Vol 16 (4) ◽  
pp. 309-328 ◽  
Author(s):  
Evgeniya Lukinova ◽  
Mikhail Myagkov ◽  
Pavel Shishkin
Keyword(s):  
Decision Making ◽  
Utility Function ◽  
Social Relationship ◽  
Social Utility ◽  
Content Type ◽  
Individual Level ◽  
Know How ◽  
General Utility ◽  
The Social ◽  
Individual Decisions

Purpose – This paper aims to study the value of sociality. Recent experimental evidence has brought to light that the assumptions of the Prospect Theory by Kahneman and Tversky do not hold in the proposed substantive domain of “sociality”. In particular, the desire to be a part of the social environment, i.e. the environment where individuals make decisions among their peers, is not contingent on the framing. Evolutionary psychologists suggest that humans are “social animals” for adaptive reasons. However, entering a social relationship is inherently risky. Therefore, it is extremely important to know how much people value “sociality”, when the social outcomes are valued more than material outcomes and what kinds of adaptations people use. Design/methodology/approach – We develop a new theory and propose the general utility function that features “sociality” component. We test the theory in the laboratory experiments carried out in several countries. Findings – Our results suggest that when stakes are low the theory of “sociality” is successful in predicting individual decisions: on average, people do value “sociality” and it surpasses the monetary loss. Originality/value – The main contribution of this paper is the breakdown of the risk attitudes under low stakes and individual level of decision-making. Another advancement is the ability to formalize the social utility or the theory of “sociality” in an economic model; we use general utility function that we define both on the outcomes and on the process of the decision-making itself and test in laboratory studies.

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