Distinguishing Two Forms of Consumer Uncertainty

Probability is a janus-faced concept. Probability can be conceptualized either as the quantification of stochastic events (aleatory uncertainty) or as subjective degrees of beliefs (epistemic uncertainty) (Fox & Ülkümen, 2011). In this talk, we develop a novel Epistemic and Aleatory Uncertainty Scale (EARS), demonstrating that consumers meaningfully distinguish between these two variants of uncertainty. Along the way, we show that these representations of uncertainty have important consequences for various facets of consumer judgment and choice, including attributions of credit and blame, hindsight bias, and budgeting decisions. Many consumption activities require an explicit or implicit evaluation of expert forecasting. For example, consumers trust financial advisors to manage their savings partly because they believe advisors can skillfully predict market conditions in ways that help grow their investments. In our first study, we examined if people reliably distinguish between epistemic and aleatory uncertainty, and if these variants of uncertainty are differentially implicated in judgments of praise and blame.