Robert Mislavsky

Assistant Professor of Marketing - Johns Hopkins University

When Risk is Weird: Unexplained Transaction Features Lower Valuations

Journal article

Robert Mislavsky, Uri Simonsohn
Management Science, vol. 64(11), 2018, pp. 5395-5404
DOI: 10.1287/mnsc.2017.2868
View PDF Online Supplementary Materials
Cite

Cite

APA   Click to copy
Mislavsky, R., & Simonsohn, U. (2018). When Risk is Weird: Unexplained Transaction Features Lower Valuations. Management Science, 64(11), 5395–5404. https://doi.org/10.1287/mnsc.2017.2868

Chicago/Turabian   Click to copy
Mislavsky, Robert, and Uri Simonsohn. “ When Risk Is Weird: Unexplained Transaction Features Lower Valuations.” Management Science 64, no. 11 (2018): 5395–5404.

MLA   Click to copy
Mislavsky, Robert, and Uri Simonsohn. “ When Risk Is Weird: Unexplained Transaction Features Lower Valuations.” Management Science, vol. 64, no. 11, 2018, pp. 5395–404, doi:10.1287/mnsc.2017.2868.

BibTeX   Click to copy 

@article{robert2018a,
  title = { When Risk is Weird: Unexplained Transaction Features Lower Valuations},
  year = {2018},
  issue = {11},
  journal = {Management Science},
  pages = {5395-5404},
  volume = {64},
  doi = {10.1287/mnsc.2017.2868},
  author = {Mislavsky, Robert and Simonsohn, Uri}
}
We define transactions as weird when they include unexplained features, that is, features not implicitly, explicitly, or self-evidently justified, and propose that people are averse to weird transactions. In six experiments, we show that risky options used in previous research paradigms often attained uncertainty via adding an unexplained transaction feature (e.g., purchasing a coin flip or lottery), and behavior that appears to reflect risk aversion could instead reflect an aversion to weird transactions. Specifically, willingness to pay drops just as much when adding risk to a transaction as when adding unexplained features. Holding transaction features constant, adding additional risk does not further reduce willingness to pay. We interpret our work as generalizing ambiguity aversion to riskless choice.
Share