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 lower.
C)people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is higher.
D)people prefer certain outcomes to uncertain outcomes even when the expected values are the same.

Question

Quizplus · Accepted Answer

The certainty effect is a phenomenon where people prefer certain outcomes over uncertain ones, even when the uncertain outcome has a higher expected value. This reflects a general aversion to risk, as individuals tend to value the guarantee of a certain outcome more than the potential for a higher, but not guaranteed, return.

The Certainty Effect Shows That