The certainty effect shows that A. people are overconfident about their choices. B. people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is higher. C. people prefer certain outcomes to uncertain outcomes even when the expected values are the same. D. people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is lower.

Question

Social Studies

Mathis

15 August, 14:44

The certainty effect shows that A. people are overconfident about their choices. B. people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is higher. C. people prefer certain outcomes to uncertain outcomes even when the expected values are the same. D. people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is lower.

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Carina Huber · Answer 1

B. people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is higher.

Explanation:

The certainty effect indicates that people tend to prefer safe results to risk, that is, they overvalue the certainty of winning something, even smaller. In other words, the certainty effect represents a situation where people faced with two possibilities prefer the one that will happen for sure, even though the other possibility may have a better outcome.