When deciding between playing a lottery with an 80% chance of winning $4,000 or receiving $3,000 outright,most people choose the _____ because of the _____.
A)lottery;preference for variable rewards
B)lottery;rational choice theory
C)$3,000;sunk-cost fallacy
D)$3,000;certainty effect

Question

Quizplus · Accepted Answer

Most people choose the guaranteed $3,000 over the lottery due to the certainty effect, which is the tendency for people to prefer sure gains over probabilistic ones, even when the expected value is higher for the probabilistic choice.

When Deciding Between Playing a Lottery with an 80% Chance