Pseudocertainty effect

From Wikipedia, the free encyclopedia

The pseudocertainty effect is a concept from prospect theory. It refers to people's tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes. Their choices can be affected by simply reframing the descriptions of the outcomes without changing the actual utility.

Contents 1 Example (Kahneman and Tversky) 1.1 Scenario one 1.2 Scenario two 1.3 Conclusion 2 See also 3 External links

[edit] Example (Kahneman and Tversky)

[edit] Scenario one

An epidemic breaks out that's likely to kill 600 people if left untreated. Treatment strategy A will save 200 people. Treatment strategy B has 1/3 chance of saving 600 people and 2/3 chance of saving nobody.

From 152 people questioned, 72% recommended strategy A and 28% recommended strategy B. Most respondents preferred the definite positive outcome of saving 200 people, over the conditional but larger positive outcome of saving 600 people.

[edit] Scenario two

Next, 155 people were given the same data in a different way. They were told: under treatment strategy A, 400 people will die. Under treatment strategy B, there is a 1/3 probability that nobody will die, and a 2/3 probability that 600 people will die. With this formulation, 78% of the 155 respondents chose strategy B. They were willing to accept the risk of a larger negative outcome (600 people dying) to have a chance of averting an otherwise definite negative outcome (400 people dying).

[edit] Conclusion

Scenarios one and two are exactly the same except worded in a different way, yet the respondents reach opposing conclusions for each scenario. Thus, the way a scenario is worded influences the decision of the respondent.

[edit] See also

Loaded question

[edit] External links

• Kahneman, Daniel and Tversky, Amos. The Framing of Decisions and the Psychology of Choice Science 211 (1981), pp. 453­8, copyright 1981 by the American Association for the Advancement of Science. [1]