Alex Shaw, Haotian Zhou

University of Chicago Booth School of Business

Uncertainty can often inspire anxiety. It has been shown to have negative effects on the markets and even the economy at large. But research suggests that uncertainty in rewards can motivate us to pursue goals.

Chicago Booth’s Ayelet Fishbach and Christopher K. Hsee, and coauthor Luxi Shen of the Chinese University of Hong Kong, a recent Booth graduate, investigated the relationship between uncertainty and motivation by offering participants in a study a reward to complete an unpleasant task and manipulating the magnitude and certainty of this reward.

Although previous research has demonstrated that people like to avoid uncertainty, Fishbach, Hsee, and Shen predicted that people would work harder in pursuit of an incentive of an uncertain magnitude, even if that incentive would potentially pay less than a more certain one.

For example, in one study participants were asked to drink 1.4 liters of water in two minutes in exchange for a monetary reward. Some were told they would receive $2 for completing the task, and others were told they would receive either $1 or $2, with the amount being determined by a coin flip. The best possible reward in either scenario was $2, but more people finished the water in pursuit of the uncertain reward.

The researchers found the same motivation-enhancement effect of uncertain rewards in other tasks and demonstrated that this uncertainty was motivating partly because it added an element of excitement to the task.

(Printed in CRII’s Retail & Business with permission from University of Chicago Booth School of Business [Facebook – www.facebook.com/BoothCapIdeas, Twitter – @BoothCapIdeas and YouTube – www.youtube.com/user/BoothThinking]; the article was originally published on the Capital Ideas website: www.ChicagoBooth.edu/capideas”; Retail & Business is India’s leading retail publication)