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

Melody Meza

Social Studies

27 July, 04:23

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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Yuliana Casey · 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.