Legal Definitions - certainty effect

The certainty effect describes a cognitive bias where individuals tend to invest disproportionately more resources (such as time, money, or effort) into acquiring information, even if the expected value of that information is low, simply because they believe it could transform a highly probable outcome into an absolute certainty. This bias leads people to overvalue information that promises to eliminate the last sliver of doubt, often ignoring the diminishing returns of such an investment compared to situations where information could significantly improve a less certain prospect.

Here are some examples illustrating the certainty effect:

• Business Product Launch: A technology company has conducted extensive market research, focus groups, and beta testing for its new software, leading to a 95% confidence level that the product will be a major success. Despite this high probability, the CEO insists on spending an additional $75,000 on a final, highly specialized consulting firm to perform one more round of niche user interviews, hoping to achieve 100% certainty before launch. The consulting firm's findings ultimately confirm what was already known, providing minimal new insights.

  This illustrates the certainty effect because the company invested significant additional funds for a marginal increase in certainty (from 95% to a perceived 100%), rather than allocating those resources to other, less certain projects that might have benefited more from additional research or investment.

• Legal Case Strategy: A plaintiff's legal team has gathered compelling evidence, including multiple eyewitness testimonies and forensic reports, making them 90% confident they will win a significant personal injury lawsuit. However, the lead attorney, driven by a desire to guarantee a victory, spends an extra week and thousands of dollars hiring a renowned, highly expensive expert witness to testify on a very minor, peripheral detail of the accident. The expert's testimony, while technically supportive, does not significantly alter the overall strength of the case or its high probability of success.

  Here, the attorney's decision reflects the certainty effect. They are expending disproportionate resources (time and money) to move from a very high probability of winning to an attempt at absolute certainty, even though the marginal benefit of the additional expert testimony is likely minimal compared to its cost.

• Personal Investment Decision: An individual has thoroughly researched various retirement funds and, after consulting with a financial advisor, is 98% confident in choosing a particular diversified portfolio. Despite this strong conviction, they spend an additional two full weekends reading obscure financial blogs, attending online webinars, and cross-referencing every minor detail of the fund's historical performance with alternative options, hoping to find a "perfect" choice and eliminate any remaining doubt about their decision.

  This scenario demonstrates the certainty effect as the individual invests a significant amount of personal time and effort to move from a very high level of confidence (98%) to a perceived absolute certainty (100%), even though the likelihood of uncovering genuinely new, impactful information that would change their decision is extremely low and disproportionate to the effort expended.