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Living on the Edge and In the Instant: Formalizing the Utility of Intense, High-Stake, Real-Time Experiential Consumption Robert E. Krider

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Living on the Edge and In the Instant: Formalizing the Utility of Intense, High-Stake, Real-Time Experiential Consumption Robert E. Krider Simon Fraser University Luc R. Wathieu Harvard Business School. Extreme Leisure. Millions of Frequent Participants (U.S.) Off-road mountain biking

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slide1
Living on the Edge and In the Instant: Formalizing the Utility of Intense, High-Stake, Real-Time Experiential Consumption

Robert E. Krider

Simon Fraser University

Luc R. Wathieu

Harvard Business School

extreme leisure
Extreme Leisure
  • Millions of Frequent Participants (U.S.)
    • Off-road mountain biking
      • 0.3 (1993) 2.6 (2002)
    • Kayaking / Rafting
      • 0.5 (1993) 1.3 (2001)
    • Snowboarding
      • 0.6 (1993) 1.6 (2001)
extreme leisure3
Extreme Leisure
  • the US Adventure Travel Society estimatesadventure travel was worth

$245 million in the US in 2002

extreme leisure4
Extreme Leisure
  • U.S. Hang Gliding Association Membership (hang gliding and

paragliding)

  • 1980 165
  • 1990 234
  • 2000 767
  • 2002 1688
extreme leisure voyeur department
Extreme Leisure (voyeur department)
  • EXTREME: “Denoting an activity in which participants actively seek out dangerous or even life-threatening experiences."
  • X-Games—ESPN’s contribution
  • Skateboarding, surfing, BMX, motocross, MTB, snowboarding, wakeboarding, rollerblading…
  • 2002 Summer X-Games VIII garnered 62.7 million viewers
  • 2003 Winter X-games sponsors: Jeep, Mountain Dew, Motorola, Taco Bell
literature
Literature
  • Brannigan, A. and A.A. McDougall (1983). Peril and pleasure in the maintenance of high risk sport: A study of hang-gliding. Journal of Sport Behavior,
  • Scitovsky, T. (1981). The Desire for Excitement in Modern Society.
  • Nicholson, J. (1986) Risk Recreation: A Context for developing Client Potential, Journal of Counseling and Development
  • Celsi, R. L., R. L. Rose and T. W. Leigh (1993). “An exploration of high-risk leisure consumption through skydiving” Journal of Consumer Research.
celsi rose leigh 1993
Celsi, Rose, & Leigh (1993)

Sociocultural approach to skydiving:

  • ”flow” –total involvement, no mental room left for anything else; produces euphoria; addictive
  • safety is paramount
  • control motive: matching context to abilities
  • achievement motive: desire to continually learn, to increase skill level;
  • insiders and outsiders: impossible for insiders to communicate emotions to outsiders; participants evaluate risks very differently from outsiders
  • Insiders separate controllable and uncontrollable risks.
objectives
Objectives
  • Develop formal model of voluntary risky consumption behaviour
  • Explain and integrate
  • Use this unexplored /anomalous behaviour for insights into
    • managing consumption experiences
    • Improving understanding of decision making under uncertainty
core model peril control training
Core model: peril control training
  • Most parsimonious way of making a choice to expose oneself to a probability of great loss (death) optimal
  • By incorporating control and skill learning
  • Controllable perils are function of survival skill:: probability of death is lower for a more skilled participant
  • Voluntary activities and involuntary events in the environment are defined by their mix of uncontrollable and controllable peril.
core model peril control training10
Core model: peril control training
  • Two periods:
  • First period (training peril)–choose activity with uncontrollable and controllable risk: ie, choose { pu1 , pc1 } ∈ [0,1]2 , where the Probability of death in period 1 is

P1 = pu1 + pc1

  • Second period (environmental peril)-- nature chooses controllable and uncontrollable peril pu2 , pc2 . Learning: choosing a larger pc1 in first period improves survival skill, which decreases uncontrollable risk in second period:

P2 = pu2 + pc2(1 -α pc1)

slide11
Survival Probability

S = (1 – P1)(1 – P2)

  • Decision objective
  • Solution:

-uncontrollable peril avoidance:

pu1* = 0

-controllable peril seeking

pc1 *= ½ – (1 – p2u – p2c ) /(2αp2c)

  • pc1* is greater with larger α, pc2andpu2
limitations
Limitations
  • Well defined two stage sequence—endogenous training, followed by exogenous peril
  • Foresight of exogenous peril probabilities
  • Linear learning and impact of learning on survival.
  • Why doesn’t everyone hang glide?
survey
Survey
  • Web survey of members of West Coast Soaring Club (paragliding and hang gliding), MBA students, and undergrads
  • Exploratory hypotheses are that WCSC members dislike uncontrollable risks and like controllable risks.
  • Questions on appeal of various “risky” activities with various levels of control
  • Questions on lotteries to assess relative risk preferences.
reasons for flying open ended
Reasons for flying (Open-ended )
  • Opportunities for learning about nature: weather, birds, micrometeorology, etc.
  • the never ending learning process
  • living on the edge
  • --------------------------------------------
  • fulfillment
  • Absolute escape from other pressures and demands of life - when I\'m flying there is no time to think of anything else and no way out till the flight is done.
  • absence of every thing else when flying
  • Experiencing the air as a different medium (gliding vs. still), 3D aspect of flying (i.e. 3 degrees of freedom vs.sailing - 2D or driving -1D), scenery, transcending the nature (non-powered flight)
work in progress
Work in progress
  • Eliminate need for foresight of upcoming dangerous event
  • Why doesn’t everyone hang glide?
summary
Summary
  • Voluntary exposure to peril observed
  • Focus on control and learning
  • Core model of peril control training where voluntary exposure to a probability of death is rational
  • Exploratory survey supports model
  • Leading to a deeper understanding of experiential consumption beyond extreme sports
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