Tom Purcell,FloydReports.com
Boy,is uncertainty making us uncertain.
Jonah Lehrer,a specialist in psychology and neuroscience,explains why in a recent Wall Street Journal article.
Lehrer cites an experiment in which subjects were asked how much they would offer to pay for either a $50 bookstore gift certificate or one valued at $100. They offered an average of $26.10 and $50,respectively.
Then uncertainty was added to the mix.
The subjects were told to bid on a lottery in which they were guaranteed to win either the $50 or $100 certificate.
You’d think they’d offer at least $26.10 —after all,the worst they would do is win the $50 certificate —but they were barely willing to cough up an average of $16.
Uncertainty took the gumption out of them.
Lehrer cites another experiment conducted recently by California Institute of Technology neuroeconomists.
Subjects played a simple gambling game —they bet on whether the next card from a deck of 20 would be red or black.