Date of Award

2019

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Graduate Group

Operations & Information Management

First Advisor

Joseph P. Simmons

Abstract

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.

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