Fall ’21 Inspiration Lecture 6
Wednesday, November 10, 9:30AM (New Delhi)
Choosing Without Knowing: Information Processing in Uncertain Decisions
Dr. Uma R. Karmarkar
Rady School of Management and School for Global Policy and Strategy
University of California, San Diego
Abstract: Several significant consumer decisions involve some degree of uncertainty arising from incomplete or inconclusive information. For example, we may be unsure of how to evaluate financial investments, how to approach new technologies, or how to make healthcare choices. An extensive body of literature has demonstrated that people generally find such ambiguity aversive, and that feelings of uncertainty can lead to suboptimal decision-making. However, less is known about how people use the partial information they do have to during such choices. To address this, we designed an experimental task that allows us to measure how people use incomplete favorable and unfavorable information under ambiguity. We find an apparent bias towards favorable information when estimating the value of an ambiguous gamble, despite equal weighting of favorable and unfavorable information in estimating risk. This is dependent, in part, on a key relationship between information and subjective feelings of certainty. In this talk I’ll discuss several lines of this research based on this task, related to behavioral and neural distinctions in the value of valenced information in ambiguous choice. These findings offer firms a novel angle on how people make decisions in uncertain settings and highlight a useful distinction for firms between providing consumers with information and helping them feel informed.
Uma R. Karmarkar is an Assistant Professor at the Rady School of Management and in the School for Global Policy and Strategy at the University of California, San Diego. Dr. Karmarkar holds dual Ph.D.’s in Neuroscience (UCLA), and in Marketing (Stanford GSB). Prior to her appointment at UCSD, she was a professor in the marketing unit of the Harvard Business School, and an affiliate of Harvard’s Center for Brain Sciences. Dr. Karmarkar’s research examines the factors that consciously and unconsciously influence how people make decisions, and the ensuing implications for marketplace practices. This work has been published in several leading academic journals and has received widespread attention from popular media outlets such as the Economist and the New York Times.