The certainty effect is where people focus more on their perceptions of certainty rather than the actual probable value. This partly occurs because people generally have a hard time understanding the difference between statistical values (such as 70% vs. 80%). As such, people will generally respond more positively when dealing with “absolutes” regardless of the situation. Likewise, reducing the probability when the outcome was initially certain will have more impact than if it was only likely (so, 100% to 90% vs. 50% to 40%).
The certainty effect originates back to two researchers, Kahneman and Tversky who in 1979 authored an article called “Prospect Theory: An analysis of Decision under Risk.” The article details the notion of prospect theory which also relates to the certainty effect. Prospect theory essentially emphasizes that people will generally prefer small outcomes if they are guaranteed over larger and more risky outcomes. value, simply because the decision maker thinks it might turn some claim into a total certainty.
[Last updated in May of 2023 by the Wex Definitions Team]