Opportunity Neglect: An Aversion to Low-Probability Gains.

Area of Science:

• Behavioral Economics
• Decision Science
• Cognitive Psychology

Background:

• Individuals often face decisions involving opportunities with varying probabilities of success and associated costs.
• Understanding decision-making biases is crucial for predicting economic and social behavior.

Purpose of the Study:

• To document and characterize 'opportunity neglect,' the tendency to reject low-probability opportunities.
• To investigate the conditions under which opportunity neglect occurs and how it can be mitigated.

Main Methods:

• Conducted seven preregistered studies with 2,890 adult participants across field, lab, and online settings.
• Utilized everyday contexts and incentive-compatible gambles involving goods and money.
• Manipulated probability of success, expected value, and potential costs.

Main Results:

• Participants consistently rejected low-probability opportunities, even those with positive expected value and minimal/no cost.
• Opportunity neglect was observed more frequently for low-probability versus high-probability opportunities with equal expected value.
• Participants were willing to incur costs to avoid low-probability opportunities.

Conclusions:

• Opportunity neglect is a robust phenomenon demonstrating risk aversion towards low-probability gains.
• Framing rejection as choosing a zero probability of success can mitigate opportunity neglect.
• Findings have implications for understanding decision-making in various domains, including finance and personal choices.