Monday, October 10, 2022

Aversion to Low-Probability Gains, even with no possibility of money loss

Opportunity Neglect: An Aversion to Low-Probability Gains. Emily Prinsloo et al. Psychological Science, Sep 26 2022.

Abstract: Seven preregistered studies (N = 2,890, adult participants) conducted in the field, in the lab, and online documented opportunity neglect: a tendency to reject opportunities with low probability of success even when they come 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 gambles with positive expected value—for both goods (Study 2) and money (Studies 3–7)—even with no possibility of monetary loss and nontrivial rewards (e.g., a 1% chance at $99). Participants rejected low-probability opportunities more frequently than high-probability opportunities with equal expected value (Study 3). Although taking some real-life opportunities comes with costs, we show that people are even willing to incur costs to opt out of low-probability opportunities (Study 4). Opportunity neglect can be mitigated by highlighting that rejecting an opportunity is equivalent to choosing a zero probability of success (Studies 6–7).