Three experiments confirmed that prevention-focused subjects are less likely to choose ambiguous
options than promotion-focused individuals. Moreover, people show more ambiguity aversion for the
expected performance of products representative of a prevention focus than of a promotion focus. These
results should not be attributed to the perception that the ambiguous option is more risky than the risky
option, but rather to the finding that compared with prevention-focused participants, promotion-focused
individuals expect a higher probability of success for the ambiguous option (Experiment 2).
Several academic and practical implications arise from the study. First, this article seems to be the
first to explore the relation between ambiguity aversion and regulatory focus and thus offers a more
comprehensive conceptualization. Its results also imply that researchers should control for regulatory
focus (e.g., measure participants’ chronic regulatory focus as covariance) to acquire more precise results
when they conduct research into ambiguity aversion.
These findings also offer a suggestion regarding how companies should display their brands and
products to amplify their relative advantage. When the performance of a firm’s brands or products seems
ambiguous, salespeople should talk about hopes, aspirations, and accomplishments (versus duties,
obligations, and safety). Similarly, when the brands or products represent a prevention focus (e.g., bond
fund), the product manger should design products to avoid ambiguous expected performance. For
example, one bond fund manager might inform customers of the types of bonds that comprise the bond
fund and what percentage of investments are assigned to each bond. Thus, customers can anticipate the
expected performance of the fund more precisely, which reduces the ambiguity of the performance and
makes the bond fund seem more attractive.
Suggestions for further research
Several additional avenues also exist for further research. As previously noted, based on the
proposition by Aaker and Lee (2001) and the results of this article (see the discussion sections for
Experiments 2 and 3), it is reasonable to infer that North American participants should exhibit less
ambiguity aversion than East Asian participants. Although the results seem to show that Taiwanese
participants are more prevention-focused than participants in North America (Experiment 2) and more
influenced by the performance uncertainty of prevention products (Experiment 3), this proposition should
be examined with more rigorous experiments.
Another possible research direction would be to obtain more direct evidence of how participants with
a different regulatory focus make choices. For example, it might be suitable to use a protocol method to
determine how participants make decisions. Experiment 2 indicates that although more
promotion-focused than prevention-focused participants expected higher EPS for the ambiguous
compared to the risky option and chose according to the EPS of the two options, 31.9% of the data points
(across the two tasks) without probability differences had similar results. For 186 responses (95 for
prevention, 91 for promotion) without such differences, 79.0% of the prevention-focused participants
preferred the risky option, whereas only 58.2% of the promotion-focused participants did (χ2 (1, N =
186)=9.01, p<0.01). This result implies that participants made their decisions depending not only on the
EPS, but also on other relevant regulatory focus factors such as hope, accomplishment, and maximum
goals versus safety, obligation, or minimum goals. This finding is worthy of further research.
Acknowledgments
The research reported in this article was supported by research grant NSC 97-2410-H-218-025 from
the National Science Council of Taiwan. I thank the journal editor and three anonymous reviewers for
their helpful suggestions. I also thank Chou, Yu-Jen for helpful discussions and for suggesting relevant
references.
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Authors’ Biographies
Hsin-Hsien Liu is an assistant professor of Marketing in the in the Department of Asia-Pacific Industrial
and Business Management at National University of Kaohsiung. His primary research interest is in
economic decision making.
Footnotes
1A logistic analysis was also carried out with the ambiguous option as the dummy dependent variable
(1=choosing the ambiguous option; 0=choosing the risky option) and promotion goal strength and
prevention goal strength as the predictors. The results showed that prevention goal strength had a negatively marginal effect on choosing the ambiguous option (=–0.034, p=.09) and promotion goal
strength had a positive but non-significant effect on choosing the ambiguous option (=0.016, p>.1). The
result of this logistic analysis is conceptually consistent with that of the Chi-square analysis.
2The results for the marketing scenario are shown in Table 2. However, the statistical analysis results are
omitted because they yield exactly the same results for choices as that for the Ellsberg task. Full details
can be obtained from the author.
3The author had also conducted an experiment in which the expected mean outcome of the stock bond was
higher but variable than that of the bond fund. In this experiment, participants’ choice across four
conditions were exactly similar to that of Experiment 3 (participants didn’t answer their reasons for their
decisions). More details about the design and result of the experiment can be acquired from the author.
4Since participants were not paid in the experiment, some might not write down their reason for their
decision seriously and these data might be categorized to “Others” subgroup. If the data for “Others” were
not eliminated from the mediating analysis, the result would be harder to explain. The performance ambiguity of the bond fund has a significant impact on consumer rationale (2(2, N=210)=16.64, p<.01),
whereas the performance ambiguity of the stock fund and their interaction both have marginal impacts
(2(2, N=210)=5.80, p=.06 and 2(2, N=210)=4.65, p=.10, respectively). When the model includes
participant rationale, the impact of this parameter on choice is still significant (2(2, N=210)=67.13,
p<0.01), whereas the performance ambiguity of the bond fund loses its impact (2(1, N=210)=0.08, p>0.1),
and the stock fund and their interaction still have marginal impacts on consumer choice (2(2,
N=210)=2.90, p=0.09 and 2(1, N=210)=3.57, p=0.06, respectively). Elimination of the data for “others”
also minimizes noise in the data.
Tables
Table 1: Effect of Chronic Regulatory Focus on the Relative preference for Two Options in Experiment 1
Risky option (%) Ambiguous option (%)
Prevention (N=66) 69.7 30.3
Promotion (N=66) 51.5 48.5
Notes: The row variable represents Chronic Regulatory Focus whereas the column variable represents participants’ Choice.
Table 2: Effect of Activated Regulatory Focus on Participants’ Choice and Expected Probability of Success in Experiment 2
Task Regulatory focus Choice (%) Expected probability of success (%) Risky Ambiguous RISKMORE NODIFF AMBIMORE Ellsberg
gamble
Prevention (N=148) 85.1 14.9 53.4 33.1 13.5
Promotion (N=144) 69.4 30.6 35.4 37.5 27.1
Marketing scenario
Prevention (N=148) 48.0 52.0 31.8 31.1 37.2
Promotion (N=144) 34.0 67.0 24.3 25.7 50
Notes: The term RISKMORE indicates that the expected probability of success is higher for the risky than for the ambiguous
option. The term AMBIMORE indicates that the expected probability of success is higher for the ambiguous than for the risky
option. The term NODIFF indicates that the expected probability of success is the same for the risky and ambiguous options.
Table 3: Design of Experiments 3
Bond fund
Risky Ambiguous
Stock fund Risky S: 0.5, +12%; 0.5, +2%
B: 0.5, +12%; 0.5, +2%
S: 0.5, +12%; 0.5, +2%
B: 0.4–0.6, +12%; 0.4–0.6, +2%
Ambiguous S: 0.4–0.6, +12%; 0.4–0.6, +2%
B: 0.5, +12%; 0.5, +2%
S: 0.4–0.6, +12%; 0.4–0.6, +2%
B: 0.4–0.6, +12%; 0.4–0.6, +2%
Notes: S represents the expected performance of the stock fund and B the expected performance of the bond fund. For example,
(S: 0.5, +12%; 0.5, +2% vs. B: 0.5, +12%; 0.5, +2%.) represents the expected performance of both stock and bond funds for a
50% possibility of gaining 12% and a 50% possibility of winning 2%. Similarly, (S: 0.4–0.6, +12%; 0.4–0.6, +2% vs. B: 0.5,
+12%; 0.5, +2%.) represents the expected performance of a stock fund with a 40–60% possibility of gaining 12% and a 40–60%
possibility of winning 2% and the expected performance of a bond fund with a 50% possibility of gaining 12% and a 50%
possibility of winning 2%.
Table 4: Relative shares of stock and bond funds with specific performance uncertainty in Experiment 3
Relative share (%) Risky stock and risky
bond (N=62)
Risky stock and ambiguous bond
(N=45)
Ambiguous stock and risky bond
(N=61)
Ambiguous stock and ambiguous bond
(N=42)
Stock 40.3 62.2 44.3 57.1
Bond 59.7 37.8 55.7 42.9
Notes: The row variable represents participants’ choice whereas the column variable represents four conditions.
Table 5: Participants’ rationales for their choices among different financial products with specific performance uncertainty in
Experiment 3
Table 5A: Stated reasons for participants’ decisions among four conditions
PromRele (%) PrevRele (%) Others (%)
Risky stock and risky bond (N=62) 12.9 59.7 27.4
Risky stock and ambiguous bond (N=45) 40.0 46.7 13.3
Ambiguous stock and risky bond (N=61) 27.9 57.4 14.8
Ambiguous stock and ambiguous bond (N=42) 52.4 26.2 21.4
Pooled data (N=210) 31.0 49.5 19.5
Table 5B: Stated reasons for participants’ decisions on separate stock and bond funds
PromRele (%) PrevRele (%) Others (%)
Stock Risky (N=107) 24.3 54.2 21.5
Ambiguous (N=103) 37.9 44.7 17.5
Bond Risky (N=123) 20.3 58.5 21.1
Ambiguous (N=87) 46.0 36.8 17.2
Notes: 1. The Stock/Risky condition includes risky stock and bond conditions and risky stock and ambiguous bond conditions.
The Stock/Ambiguous condition includes ambiguous stock and bond conditions and ambiguous stock and risky bond
conditions. The Bond/Risky condition includes risky stock and bond conditions and ambiguous stock and risky bond conditions.
The Bond/Ambiguous condition includes risky stock and ambiguous bond conditions and ambiguous stock and bond
conditions. 2. PromRele represents reasons associated with the presence or absence of a promotion goal, whereas PrevRele
represents reasons associated with the presence or absence of a prevention goal.