Interaction Effects

When considering the factors affecting brand choice, Ambiguity Aversion could potentially be an important one. Ambiguity aversion refers to the behavior of individuals who show a higher preference for lotteries where the probabilities are known than for those with unknown probabilities. If you carry your own toilet paper to the toilet because you are afraid there might not be any, then you are ambiguity averse (as opposed to risk averse) because you don't know the probability of missing toilet paper.  An interesting study  (MWX, hereafter) argue that ambiguity aversion makes consumers more inclined to choose established brands. They suggest that if people have subjective beliefs of the choice described with precise probabilities and ambiguous probabilities, similar beliefs should arise by a choice between two brands that vary in terms of how people perceive the quality of the brands. They asked participants to choose between the following lotteries: Lottery A: R...

The answer to the question in the title is in the affirmative. Before you begin to question my judgment I should say that I have research to back this claim. In a study, participants were visited at home for a survey. The participants consisted of family dyads, romantic couples, and friendship dyads.  Dyad members knew each other, on average, for 16 years. They were given a booklet containing 30 products with the value of each product being around 20 euros. These products were selected based on some pretesting and were equally attractive to both genders. They were first asked to select 10 products that they would like to receive as a gift and then they were asked to select 10 products that they thought their relative/partner/friend would like to receive. The quality of gift selection was calculated for each participant as the number of gifts they chose, that also appeared on the list of the counterpart. This ranged from 0 to 10. They results of the study finds that women a...