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Effects of labeling on risk taking in “leveling-up” decisions: ascending versus descending permutations and ending in terminal values

Author

Listed:
  • Haoyu Liu

    (SEM 310, ShanghaiTech University)

  • Lifeng Yang

    (SEM 313, ShanghaiTech University)

  • Duane T. Wegener

    (The Ohio State University)

Abstract

Many decisions involve attempts to advance (level up) despite risk of losing what has already been gained. This research examined how permutations (ascending or descending sequences of level labels) and labels ending in terminal values of the sequence affect risk taking. Across three experiments using a “win-more-or-lose-it-all” game, participants made a series of decisions to level up or opt out and retain previously obtained chances to win. Consistent with hypotheses that approaching a terminal value in a sequence (such as a countdown sequence ending in 1) would make risk loom large, results consistently showed earlier opt-out decisions for descending permutations ending with a terminal value than for ascending sequences or descending sequences that did not end in a terminal value. Such tendencies were also stronger for numerical than for alphabetical labels (perhaps because of greater familiarity with countdown sequences in the numerical domain).

Suggested Citation

  • Haoyu Liu & Lifeng Yang & Duane T. Wegener, 2023. "Effects of labeling on risk taking in “leveling-up” decisions: ascending versus descending permutations and ending in terminal values," Marketing Letters, Springer, vol. 34(1), pages 125-138, March.
  • Handle: RePEc:kap:mktlet:v:34:y:2023:i:1:d:10.1007_s11002-022-09633-8
    DOI: 10.1007/s11002-022-09633-8
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