Which of the following describes the certainty effect?
A)People are more willing to pay to reduce their risk from 10% down to zero than they are to reduce their risk from 50% down to 40%.
B)People are more willing to pay for a warranty plan that completely covers 30% of the possible problems rather than a plan that covers all problems with 30% probability.
C)People are more willing to take a vaccine that has 100% protection for one strain of a disease and 0% protection for another strain of the disease, than a vaccine that offers 50% protection for both strains of the disease.
D)All of the above.

Question

Quizplus · Accepted Answer

The certainty effect refers to people's preference for certain outcomes over uncertain outcomes of equivalent or higher expected value. In this case, people are more willing to pay for reducing their risk to zero, which is a certain outcome, compared to reducing their risk from 50% to 40%, which is an uncertain outcome.

Which of the Following Describes the Certainty Effect