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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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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


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Extreme Leisure Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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)


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Extreme Leisure Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • the US Adventure Travel Society estimatesadventure travel was worth

    $245 million in the US in 2002


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Extreme Leisure Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • U.S. Hang Gliding Association Membership (hang gliding and

    paragliding)

  • 1980 165

  • 1990 234

  • 2000 767

  • 2002 1688


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Extreme Leisure ( Utility of Intense, High-Stake, Real-Time Experiential Consumption 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


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Literature Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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.


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Celsi, Rose, & Leigh (1993) Utility of Intense, High-Stake, Real-Time Experiential Consumption

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.


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Objectives Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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


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Core model: peril control training Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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.


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Core model: peril control training Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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)


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  • Survival Probability Utility of Intense, High-Stake, Real-Time Experiential Consumption

    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


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Limitations Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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?


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Survey Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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.


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Reasons for flying (Open-ended ) Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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)


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Work in progress Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • Eliminate need for foresight of upcoming dangerous event

  • Why doesn’t everyone hang glide?


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Summary Utility of Intense, High-Stake, Real-Time Experiential Consumption

  • 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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