Detectability of the negative event: effect on the acceptance of pre- or post-event risk-defusing actions (original) (raw)
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Risk-defusing in decisions by probability of detection of harm and promotion and prevention focus
The Journal of Socio-Economics, 2010
Risk-defusing operators (RDO) are actions that reduce risk, to be enacted either before a negative event occurs (pre-event RDOs) or afterwards (post-event RDOs). For post-event RDOs, detection probability of the negative events is relevant. Regulatory focus theory suggests that promotion-oriented individualsindependent whether it is a personal disposition or favored by situational cues -should focus on chances to succeed and therefore choose post-event RDOs more likely than prevention-oriented individuals who are likely to focus on possible failures and means to avoid them. In two experimental studies, we examined effects of detection probability and regulatory focus as a state variable on the choice of post-event RDOs. Results replicate findings that the likelihood to choose post-event RDOs increases with increasing detection probability of the negative events. Contrary to expectation, no clear effects of regulatory focus were found. Exploratory analyses showed some evidence that successful manipulation of regulatory focus might influence RDO choices if tasks are highly relevant for decision-makers.
Behavior in risky decisions: Focus on risk defusing
In experiments on risky decisions with gambles as alternatives the central factors determining decision behaviour are: The subjective values of the outcomes, and their subjective probability. The present paper first reports results of a number of experiments indicating that this central result cannot be generalized. In quasi-realistic risky scenarios, many decision makers are not interested in probability information and many search actively for risk-defusing operators (RDOs). An RDO is an action intended by the decision maker to be performed additionally to a specific alternative in order to decrease the risk. The paper also gives an overview about experimental research with RDOs. Topics include the factors that determine the search for RDOs and the factors affecting the acceptance of an RDO. Finding an acceptable RDO has a distinct effect on choice: If for a specific risky alternative an RDO is available, this alternative is chosen most often. The consequences of the concept of RDOs on theories about decision behaviour and on aiding decision making are discussed.
Taking unknown risks based on positive and negative information
2021
Many decisions have to be made under partial ambiguity where information is notavailable about the full probability distribution of risks. To decide in a principled way,one would have to make some assumption(s) about hidden risks. We examined howpeople may balance between the valence of the available information and the potentialinformation concealed by the ambiguity. Under partial ambiguity, people showedflexible skepticism towards the valence of the partially observable probabilisticinformation. When ambiguity size was small, risk taking was sensitive to valence: if theinformation was promising, ambiguity aversion increased, skeptically balancing thepromising prospects of available positive evidence against the hazards of what mightbe hidden from the view. Conversely, when the available information wasdisappointing, ambiguity tolerance increased, cautiously anticipating more than whatthe available information promised. This flexible skepticism was not a trivially reflexiveresponse...
Journal of Behavioral Decision Making, 2011
In three experiments the problem is investigated how people identify early in the decision process those alternatives that are worthwhile to be examined in more detail. We assume that decision makers employ the Advantages first Principle: They first search for information about positive outcomes and then focus their information search (e.g., for negative consequences or for risk defusing operators) on those alternatives that appear attractive after this initial evaluation. In Experiment 1 (120 participants), initial information about consequences was varied for eight alternatives (no information, positive consequences, negative, or mixed for four alternatives). In all conditions, the great majority of participants followed both aspects of the Advantages first Principle. In Experiment 2, 60 participants decided in two quasi-realistic scenarios with two alternatives each. Initial information was presented so that one alternative had better positive consequences, worse negative consequences, or both. In all conditions, more information was searched for in the initially better alternative. In Experiment 3 (20 participants) the Advantages first Principle was not only confirmed for a scenario but also for choices in traditional gambling tasks with two and eight alternatives, respectively. Participants could win or lose real money. a summary of experimental results concerning factors influencing the search for RDOs and the factors affecting the acceptance of an RDO (e.g., costs of applying an RDO, size of its effect). Low interest in probabilities and search for RDOs were also found in a study investigating real decisions in the context of genetic counseling by . O. Huber and O. W. Huber (2008) directly compared information search in gambles and quasi-realistic scenarios. They obtained different search patterns, with those for gambles incorporating search for outcomes and probabilities, whereas in quasi-realistic scenarios participants predominantly searched for outcomes and RDOs. 2 Consider, for example, the situation of a businesswoman who is confronted with two options: She can travel into a country where an epidemic disease rages in order to negotiate an important contract, or she can postpone the meeting with the risk of failing to sign a satisfying contract . The businesswoman may inquire whether a vaccination exists or may look for possibilities to prevent an infection (e.g., by cooking water before drinking it). These additional actions are RDOs. RDOs are quite common in everyday risky decision situations. Typical examples are: If a person considers driving by car in a region where many cars are stolen, taking out car theft insurance is an RDO, or if a person considers sending important documents by mail and fears they could get lost, he or she can make a copy of the documents as an RDO. Different types of RDOs are distinguished in Note: The first number indicates the means across all eight alternatives. The number in parentheses displays means for those alternatives for which no information was presented initially. For example, if one participant in the no information condition in the maki scenario had started with search for negative consequences for two alternatives and for positive consequences for six alternatives, the respective numbers would be 0.25 for negative consequences, and 0.75 for positive consequences, respectively.
Testing and Expanding a Model of Cognitive Processing of Risk Information
Risk Analysis, 2005
Scholars have begun to explore the role of modes of information processing and related audience characteristics in reactions to risky situations and risk information. (11,12,14,17,18,20) "Information processing" concerns how people attend to and consider available information: systematic processors analyze messages and situations carefully, while heuristic processors skim and use cues (e.g., opinions of trusted reference groups) for quick judgments. This article uses scenarios about a semi-hypothetical industrial facility, in particular risk comparisons being considered by its manager for inclusion in a talk to the community, to explore the impact of information processing. Information insufficiency, self-assessed capacity to understand information, and information-seeking propensities are tested for potential effects on information processing about industrial risks by people living near industry. As well as testing established models, this article explores the additional explanatory value of involvement, relevance, and ability (Earle et al., 1990) and objective knowledge. Both existing model variables and new ones have significant effects on information seeking and information processing in this case, and partly confirm earlier results. Trumbo (17,18) found that heuristic processors saw lower risk and systematic processors higher risk from suspected cancer clusters. In this study, reporting knowledge about local industrial risks as insufficient for one's purposes and self-reported avoidance of such information both raised ratings of the facility's risk and lowered ratings of its acceptability. Neither type of information processing significantly affected risk or acceptability judgments, but both increased risk ratings and heuristic processing had more effect than systematic processing. Positive ratings of risk comparisons' clarity and meaningfulness decreased risk and increased acceptability ratings, dominated other information variables in predictive power, and exceeded risk, benefit, and trust in contribution to acceptability judgments. Despite differences across studies in designs and variables, and the embryonic development of appropriate (self-reported) measures for use in field surveys, these results confirm the potential value of further research in how information seeking and processing affect risk beliefs and reactions to risk communications.
The Psychology of Risk: A Brief Primer
SSRN Electronic Journal, 1999
Risk is commonly defined in negative terms-the probability of suffering loss, or factors and actions involving uncertain dangers or hazards. In contrast, the definition used in the social sciences relies on simply the degree of uncertainty-how much variance exists among the possible outcomes associated with a particular choice or action. Counter to intuition, an investment that will lose 5forcertainwouldthereforebeclassifiedaslessriskythanonethathasanequalchanceofyieldingeitheragainof5 for certain would therefore be classified as less risky than one that has an equal chance of yielding either a gain of 5forcertainwouldthereforebeclassifiedaslessriskythanonethathasanequalchanceofyieldingeitheragainof10 or a gain of $15. Uncertainty and value are treated as separable entities because expanding the notion of risk to include gains as well as losses adds considerable conceptual power. For example, depending on how a pair of options is described, a choice can appear as if between two losses or between two gains. Consider the following: Problem I: Imagine that you are faced with a life or death choice. The U.S. has safely quarantined all 600 people infected with an unusual virus, but is now certain that they will all die without some treatment. Resources are severely limited and the choice mast be made between two scienttjk programs. Program A: If adopted, 2cO people will be saved for certain. Program B: If adopted, there is a IN probability that 600 people will be saved and a 2/3 probability that no people will be saved. People choose A over B by a ratio of three to one, showing a preference for the certain outcome. Now consider the same scenario with a different set of choices. Program C: if adopted, 400 people will die for certain. Program D: If adopted, there is a l/3 probability that no people will die and a 213 probability that 600 people will die. People choose D over C by a ratio of four to one, showing a preference for risk. However, note that the end results of A and C are exactly the same-200 people alive, 400 dead-as are those of B and D. According to classical theories of rationality, one cannot both prefer A to B and D to C. This paper will discuss why most people do. Economic theories based on "perfect" rationality are undoubtedly powerful. If one wanted to describe or predict human behavior in the simplest possible manner, one would certainly want to begin by assuming (1) that people are motivated by their own self interests, and (2) that they can be extremely calculating when valuable opportunities arise, learning quickly from the success of others. Research on the psychology of risk does not begin by assuming that all human behavior is irrational, random, or thoughtless. Rather this research has centered on how people may be biased by
The impact of ambiguity and prudence on prevention decisions
Theory and Decision, 2015
Most decisions concerning (self-)insurance and self-protection have to be taken in situations in which (a) the effort exerted precedes the moment uncertainty realizes, and (b) the probabilities of future states of the world are not perfectly known. By integrating these two characteristics in a simple theoretical framework, this paper derives plausible conditions under which ambiguity aversion raises the demand for (self-)insurance and self-protection. In particular, it is shown that in most usual situations where the level of ambiguity does not increase with the level of effort, a simple condition of ambiguity prudence known as decreasing absolute ambiguity aversion (DAAA) is sufficient to give a clear and positive answer to the question: Does ambiguity aversion raise the optimal level of effort?
Risk Perception, Prevention and Diagnostic Tests
Health Economics, 2012
The objective of this paper is to study the impact of risk perception and diagnostic information on medical prevention decisions. The intertemporal preferences of individuals are represented by a model of recursive rank dependent utility, which has the advantage of allowing risk perceptions to vary over time and with health status. The main results of the paper are the following. Concerning the impact of risk perception on prevention, two types of pessimists have to be distinguished: the moderate pessimists and the fatalists. Both types overestimate the probability of disease, but the fatalists underestimate the reduction of the disease probability by prevention. Risk perception modification after the occurrence of the disease influences prevention decisions. Indeed, we show that moderate pessimists often choose a high level of primary and tertiary prevention, but a moderate pessimist who becomes fatalist after the occurrence of the disease may choose a high level of primary prevention and a low level of tertiary prevention.