Risk attitudes and the structure of decision-making: evidence from the Illinois hog industry

2016 ◽  
Vol 48 (1) ◽  
pp. 41-50 ◽  
Author(s):  
Jason R.V. Franken ◽  
Joost M.E. Pennings ◽  
Philip Garcia
Keyword(s):  
Decision Making ◽  
Risk Attitudes ◽  
Hog Industry

scholarly journals Cognitive bias, decision styles, and risk attitudes in decision making and DSS

2019 ◽  
Vol 28 (2) ◽  
pp. 63-66 ◽  
Author(s):  
Gloria Phillips-Wren ◽  
Daniel J. Power ◽  
Manuel Mora
Keyword(s):  
Decision Making ◽  
Cognitive Bias ◽  
Risk Attitudes ◽  
Decision Styles

scholarly journals Chimpanzees (Pan troglodytes) Are More Averse to Social Than Nonsocial Risk

2018 ◽  
Vol 30 (1) ◽  
pp. 105-115 ◽  
Author(s):  
Sarah E. Calcutt ◽  
Darby Proctor ◽  
Sarah M. Berman ◽  
Frans B. M. de Waal
Keyword(s):  
Decision Making ◽  
Pan Troglodytes ◽  
Risk Taking ◽  
Trust Game ◽  
Risk Attitudes ◽  
Social Risk ◽  
Risky Decision ◽  
Emotional Factors ◽  
Economic Decision Making ◽  
Tit For Tat

Social risk is a domain of risk in which the costs, benefits, and uncertainty of an action depend on the behavior of another individual. Humans overvalue the costs of a socially risky decision when compared with that of purely economic risk. Here, we played a trust game with 8 female captive chimpanzees ( Pan troglodytes) to determine whether this bias exists in one of our closest living relatives. A correlation between an individual’s social- and nonsocial-risk attitudes indicated stable individual variation, yet the chimpanzees were more averse to social than nonsocial risk. This indicates differences between social and economic decision making and emotional factors in social risk taking. In another experiment using the same paradigm, subjects played with several partners with whom they had varying relationships. Preexisting relationships did not impact the subjects’ choices. Instead, the apes used a tit-for-tat strategy and were influenced by the outcome of early interactions with a partner.

scholarly journals Outcome uncertainty influences probability perception and risk attitudes

2021 ◽  
Vol 8 (10) ◽  
Author(s):  
Thomas Ward Elston ◽  
Ian Grant Mackenzie ◽  
Victor Mittelstädt
Keyword(s):  
Decision Making ◽  
Probabilistic Inference ◽  
Critical Role ◽  
Risk Attitudes ◽  
Maximal Effect ◽  
Trade Off ◽  
Novel Theory ◽  
Low Probability ◽  
Gain And Loss

Subjective inferences of probability play a critical role in decision-making. How we learn about choice options, through description or experience, influences how we perceive their likelihoods, an effect known as the description–experience (DE) gap. Classically, the DE gap details how low probability described options are perceptually inflated as compared to equiprobable experience ones. However, these studies assessed probability perception relative to a ‘sure-bet’ option, and it remained unclear whether the DE gap occurs when humans directly trade-off equiprobable description and experience options and whether choice patterns are influenced by the prospects of gain and loss. We addressed these questions through two experiments where humans chose between description and experience options with equal probabilities of either winning or losing points. Contrary to early studies, we found that gain-seeking participants preferred experience options across all probability levels and, by contrast, loss-mitigating participants avoided the experience options across all probability levels, with a maximal effect at 50%. Our results suggest that the experience options were perceived as riskier than descriptive options due to the greater uncertainty associated with their outcomes. We conclude by outlining a novel theory of probabilistic inference where outcome uncertainty modulates probability perception and risk attitudes.

scholarly journals A Kind of Risk-Sensitive Group Decision-Making Based on MDP

2012 ◽  
Vol 6-7 ◽  
pp. 267-272
Author(s):  
Ming Shan You ◽  
Wei Zeng ◽  
Hong Tao Zhou
Keyword(s):  
Decision Making ◽  
Utility Function ◽  
Group Decision Making ◽  
Group Decision ◽  
Critical Role ◽  
Risk Attitude ◽  
Risk Attitudes ◽  
Personal Risk ◽  
Risk Sensitive ◽  
Sensitive Group

One-switch utility function is used to describe how the risk attitude of a decision maker changes with his wealth level. In this paper additive decision rule is used for the aggregation of decision member’s utility which is represented by one-switch utility function. Based on Markov decision processes (MDP) and group utility, a dynamic, multi-stages and risk sensitive group decision model is proposed. The proposed model augments the state of MDP with wealth level, so the policy of the model is defined as an action executed in a state and a wealth level interval. A backward-induction algorithm is given to solve the optimal policy for the model. Numerical examples show that personal risk attitude has a great influence on group decision-making when personal risk attitudes of members are different, while the weights of members play a critical role when personal risk attitudes of members are similar.

Individual pension-related risk propensities: the effects of socio-demographic characteristics and a spousal pension entitlement on risk attitudes

2008 ◽  
Vol 28 (6) ◽  
pp. 847-874 ◽  
Author(s):  
GORDON L. CLARK ◽  
KENDRA STRAUSS
Keyword(s):  
Decision Making ◽  
Social Status ◽  
Adult Population ◽  
Pension Plan ◽  
Pension Plans ◽  
Demographic Characteristics ◽  
Risk Attitudes ◽  
Occupational Pension ◽  
Related Risk ◽  
The Social

ABSTRACTThe transition from defined-benefit to defined-contribution occupational-pension plans has placed a premium on the participants' or contributors' decision-making competence. Their attitudes to risk and their responses to available investment options can have far-reaching implications for their retirement income. Behavioural research on risk and uncertainty has raised understanding of the limits of individual decision-making, but the social status and demographic characteristics of plan participants may also affect risk perception and pension choices. By studying a random sample of the British adult population, this paper explores the significance of socio-demographic characteristics for pension-related risk attitudes. It is demonstrated that pension-plan participants do not appear to understand the risks associated with different types of retirement savings and pension plans. The paper also shows that the gender, age and income of plan participants can give rise to distinctive risk propensities, and that marital status and, in particular, whether a spouse also has a pension can also have significant consequences for household risk preferences. These results have implications for those segments of the population that are disadvantaged in the labour market. Employer-provided pensions' education and information programmes may have to be more basic and more closely tailored to the social status of pension plan participants than hitherto assumed or hoped.

Toward Considering Risk Attitudes in Engineering Organizations Using Utility Theory

2012 ◽  
Author(s):  
Douglas Van Bossuyt ◽  
Chris Hoyle ◽  
Irem Y. Tumer ◽  
Andy Dong ◽  
Toni Doolen ◽  
...  
Keyword(s):  
Decision Making ◽  
Risk Attitude ◽  
Expected Value ◽  
Utility Functions ◽  
Risk Attitudes ◽  
Risk Averse ◽  
Past Performance ◽  
Domain Specific ◽  
Specific Risk ◽  
Engineering Organizations

Design projects within large engineering organizations involve numerous uncertainties that can lead to unacceptably high levels of risk. Practicing designers recognize the existence of risk and commonly are aware of events that raise risk levels. However, a disconnect exists between past project performance and current project execution that limits decision-making. This disconnect is primarily due to a lack of quantitative models that can be used for rational decision-making. Methods and tools used to make decisions in risk-informed design generally use an expected value approach. Research in the psychology domain has shown that decision-makers and stakeholders have domain-specific risk attitudes that often have variations between individuals and between companies. Risk methods used in engineering such as Failure Modes and Effects Analysis (FMEA), Fault Tree Analysis (FTA), and others are often ill-equipped to help stakeholders make decisions based upon risk-tolerant or risk-averse decision-making conditions. This paper focuses on the specific issue of helping stakeholders make decisions under risk-tolerant or risk-averse decision-making conditions and presents a novel method of translating engineering risk data from the domain of expected value into a domain corrected for risk attitude. This is done by using risk utility functions derived from the Engineering-Domain-Specific Risk-Taking (E-DOSPERT) test. This method allows decisions to be made based upon data that is risk attitude corrected. Further, the method uses an aspirational measure of risk attitude as opposed to existing lottery methods of generating utility functions that are based upon past performance. An illustrative test case using a simplified space mission designed in a collaborative design center environment is included. The method is shown to change risk-informed decisions in certain situations where a risk-tolerant or risk-averse decision-maker would likely choose differently than the dictates of the expected value approach.

What Factors Moderate Self-Other Discrepancies in Decision Making? Results from a Vaccination Scenario

2016 ◽  
Vol 19 ◽  
Author(s):  
Dafina Petrova ◽  
Rocio Garcia-Retamero ◽  
Joop van der Pligt
Keyword(s):  
Decision Making ◽  
Young Adults ◽  
Social Norms ◽  
Social Norm ◽  
Risk Attitudes ◽  
Sexually Transmitted ◽  
Transmitted Virus ◽  
The Social ◽  
Decisions For Others ◽  
Risky Decisions

AbstractWhen we make risky decisions for others, we tend to follow social norms about risks. This often results in making different decisions for others than we would make for ourselves in a similar situation (i.e., self-other discrepancies). In an experiment, we investigated self-other discrepancies in young adults’ decisions to purchase a vaccine against a sexually-transmitted virus for themselves or for another person (i.e., the target of the decision). When the target’s preferences were in line with social norms, surrogates showed large self-other discrepancies in line with these norms. When the target’s preferences were contrary to social norms, surrogates did not show self-other discrepancies in line with these preferences; instead they still followed social norms, F(1, 140) = 21.45, p < .001, ηp2 = .13. Surrogates with lower numeracy, F(2, 128) = 3.44, p = .035, ηp2 = .05, and higher empathy, F(2, 128) = 3.72, p = .027, ηp2 = .06, showed self-other discrepancies more in line with the target’s preferences, even when these were contrary to the norm. Surrogates whose own risk attitudes were contrary to social norms showed larger self-other discrepancies, F(1, 128) = 5.38, p = .022, ηp2 = .04. These results demonstrate that perceived social norms about risk can predict self-other discrepancies in risky decisions, even when the target’s preferences are known and at odds with the social norm. Further, the surrogates’ numeracy, empathy, and propensity to take risks influence the extent to which risky decisions for others resemble risky decisions for oneself.

scholarly journals Why Buy Accident Forgiveness Policies? An Experiment

2018 ◽  
Vol 10 (8) ◽  
pp. 1
Author(s):  
Fan Liu
Keyword(s):  
Decision Making ◽  
Risk Aversion ◽  
Time Preferences ◽  
Purchase Decision ◽  
Risk Attitudes ◽  
Purchase Decisions ◽  
Risk Averse ◽  
Product Price ◽  
High Degree

Risk and time preferences influence the insurance purchase decisions under uncertainty. Accident forgiveness, often considered as “premium insurance,” protects policyholders against a premium increase in the next period if an at-fault accident occurs. In this paper, by conducting a unique experiment in the controlled laboratory conditions, we examine the role of risk and time preferences in accident forgiveness purchase decisions. We find that individual discount rates and product price significantly affect premium insurance purchase decision. Interestingly, we also find evidence that less risk averse policyholders in general behave more like risk neutral when making insurance decision. Risk attitudes affect insurance decision-making only among those who have relatively high degree of risk aversion.

The prospect of predictive testing for personal risk: attitudes and decision making

1998 ◽  
Vol 36 (6) ◽  
pp. 599-619 ◽  
Author(s):  
Abigail L. Wroe ◽  
Paul M. Salkovskis ◽  
Katharine A. Rimes
Keyword(s):  
Decision Making ◽  
Predictive Testing ◽  
Risk Attitudes ◽  
Personal Risk
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