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

1. 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

2. 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)

3. Extreme Leisure • the US Adventure Travel Society estimatesadventure travel was worth $245 million in the US in 2002

4. Extreme Leisure • U.S. Hang Gliding Association Membership (hang gliding and paragliding) • 1980 165 • 1990 234 • 2000 767 • 2002 1688

5. 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

6. 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.

7. 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.

8. 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

9. 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.

10. 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)

11. 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

12. 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?

13. 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.

19. 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)

20. Work in progress • Eliminate need for foresight of upcoming dangerous event • Why doesn’t everyone hang glide?

21. 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