Certainty/Possibility Effect

Definition 1

Likelihood of selection of choice options affected by the probability of gains or losses, determined not by the absolute value of the change, but by the degree of change relative to a base level. (See Saliency, Prospect Theory and Zero Price Effect.)

Source: Behavioral Science Lab, 2017

Definition 2

Changes in the probability of gains or losses do not affect people’s subjective evaluations in linear terms (see also prospect theory and zero price effect) (Tversky & Kahneman, 1981). For example, a move from a 50% to a 60% chance of winning a prize has a smaller emotional impact than a move from a 95% chance to a 100% chance (certainty). Conversely, the move from a 0% chance to a 5% possibility of winning a prize is more attractive than a change from 5% to 10%.

Source: Behavioral Economics