Image source: Shel Silverstein via Asher Days blog
When I first started my dissertation, I came across an old Association for Consumer Research (ACR) address by Ivan Ross about the different types of risks that consumers face. One risk in particular -- opportunity lost risk -- caught my attention. This risk has received little attention in the literature, but I consistently find myself thinking about it and its prevalence in a society that has become overwhelmed by new product opportunities and constant technological upgrades. Social media has even led to the coinage of the term "FOMO" (Fear of Missing Out), which is anxiety caused by the fear of missing out on social interactions, potential experiences, or other such events. Opportunity lost risk is related but different - FOMO is socially defined, while opportunity lost risk is about the fear of missing out on a better opportunity by taking (or not taking) a certain action (that is at least how I think about it - it has not been well-defined in my review of the existing research).
I started thinking about opportunity lost risk again after reading a recent article in Entertainment Weekly about the making of Gone with the Wind. In the article, they discuss the producer, David Selznick's, perseverance in the face of many obstacles and repeated failures while making the film. In the article, the writer, Chris Nashawaty, says about Selznick, "But like all gamblers, he lived in a constant state of fear that someone else might rake in a pot that he felt rightfully belonged to him." This is an interesting perspective on gambling as most of the research on financial risk-taking has found that people are extremely risk averse because they fear losing or the regret associated with taking a gamble and subsequently losing. But opportunity lost risk suggests that some people may focus on not winning a prize that they could win by taking the gamble - a sort of inverse loss aversion (the loss of a gain looms larger than potential losses). So when do people focus on the gains they might miss out on versus the losses they may incur by not taking a risk? My suspicion is that it may be a combination of individual factors and contextual cues. Whatever the cause, it is likely becoming more and more important in our increasingly entrepreneurial economy and our highly turbulent product marketplace.
I started thinking about opportunity lost risk again after reading a recent article in Entertainment Weekly about the making of Gone with the Wind. In the article, they discuss the producer, David Selznick's, perseverance in the face of many obstacles and repeated failures while making the film. In the article, the writer, Chris Nashawaty, says about Selznick, "But like all gamblers, he lived in a constant state of fear that someone else might rake in a pot that he felt rightfully belonged to him." This is an interesting perspective on gambling as most of the research on financial risk-taking has found that people are extremely risk averse because they fear losing or the regret associated with taking a gamble and subsequently losing. But opportunity lost risk suggests that some people may focus on not winning a prize that they could win by taking the gamble - a sort of inverse loss aversion (the loss of a gain looms larger than potential losses). So when do people focus on the gains they might miss out on versus the losses they may incur by not taking a risk? My suspicion is that it may be a combination of individual factors and contextual cues. Whatever the cause, it is likely becoming more and more important in our increasingly entrepreneurial economy and our highly turbulent product marketplace.
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