scholarly journals Through the Window of My Mind: Mapping Information Integration and the Cognitive Representations Underlying Self-Reported Risk Preference

2019 ◽  
Author(s):  
Markus D. Steiner ◽  
Florian Ismael Seitz ◽  
Renato Frey
Keyword(s):  
Information Integration ◽  
Cognitive Modeling ◽  
Risk Preferences ◽  
Temporal Stability ◽  
Internal Validity ◽  
Risk Preference ◽  
Cognitive Representations ◽  
Strength Of Evidence ◽  
Trade Offs ◽  
Self Reports

A person’s risk preference may determine significant life outcomes (e.g., in finance or health). People are therefore routinely asked to report their risk preferences in various scientific and applied contexts, yet still little is known concerning the cognitive underpinnings of this judgment-formation process. We ran two studies (N = 250, and N = 150 in a retest) implementing the process-tracing method of aspect listing to investigate the information- integration processes underlying people’s self-reports by means of cognitive modeling (RQ1) and to examine people’s cognitive representations of their risk preferences (RQ2). Our analyses indicate that interindividual differ- ences in self-reported risk preferences can be modeled well based on the listed aspects’ properties of evidence, and substantially better than using sociodemographic variables as predictors. Specifically, to render self-reports people appear to integrate the strength of evidence of multiple aspects sam- pled from memory. These aspects—that is, people’s cognitive representation of their risk preferences—mostly referred to the magnitudes of outcomes, and in line with a risk–return perspective, often explicitly referred to trade-offs between positive and negative outcomes. Crucially, within participants the strength of evidence of the listed aspects remained highly stable across the two studies (RQ3), and changes therein were closely related to changes in self-reported risk preference (RQ4). In sum, our findings provide cognitive insights concerning how people render self-reports of their risk preferences, suggest an explanation for the well-documented temporal stability thereof, and thus corroborate the internal validity of this measurement approach.

scholarly journals Three Gaps and What They May Mean for Risk Preference

2018 ◽  
Author(s):  
Ralph Hertwig ◽  
Dirk U. Wulff ◽  
Rui Mata
Keyword(s):  
Convergent Validity ◽  
Temporal Stability ◽  
Risk Preference ◽  
Building Blocks ◽  
Self Report ◽  
Domain Specific ◽  
Health And Wellbeing ◽  
Self Reports ◽  
High Degree ◽  
Future Work

Risk preference is one of the most important building blocks of choice theories in the behavioural sciences. In economics, it is often conceptualised as preferences concerning variance of monetary payoffs, whereas in psychology risk preference is often thought to capture the propensity to engage in behaviour with the potential for loss or harm. Both concepts are associated with distinct measurement traditions: Economics has traditionally relied on behavioural measures, while psychology has often relied on self-reports. We review three important gaps that have emerged from work stemming from these two measurement traditions: First, a description–experience gap which suggests that behavioural measures do not speak with one voice and can give very different views on an individual’s appetite for risk; second, a behaviour–self-report gap which suggests that different self-report measures, but not behavioural measures, show a high degree of convergent validity; and, third, a temporal stability gap which suggests that self-reports, but not behavioural measures, show considerable temporal stability across periods of years. Risk preference, when measured through self-reported preferences—but not behavioural preferences—appears as a moderately stable psychological trait with both general and domain-specific components. We argue that future work needs to address the gaps which have emerged from the two measurement traditions and test their differential predictive validity for important economic, health and wellbeing outcomes.

scholarly journals Three gaps and what they may mean for risk preference

2018 ◽  
Vol 374 (1766) ◽  
pp. 20180140 ◽  
Author(s):  
Ralph Hertwig ◽  
Dirk U. Wulff ◽  
Rui Mata
Keyword(s):  
Convergent Validity ◽  
Temporal Stability ◽  
Risk Preference ◽  
Well Being ◽  
Building Blocks ◽  
Self Report ◽  
Domain Specific ◽  
Theoretical Perspectives ◽  
Self Reports ◽  
Behavioural Tests

Risk preference is one of the most important building blocks of choice theories in the behavioural sciences. In economics, it is often conceptualized as preferences concerning the variance of monetary payoffs, whereas in psychology, risk preference is often thought to capture the propensity to engage in behaviour with the potential for loss or harm. Both concepts are associated with distinct measurement traditions: economics has traditionally relied on behavioural measures, while psychology has often relied on self-reports. We review three important gaps that have emerged from work stemming from these two measurement traditions: first, a description–experience gap which suggests that behavioural measures do not speak with one voice and can give very different views on an individual's appetite for risk; second, a behaviour–self-report gap which suggests that different self-report measures, but not behavioural measures, show a high degree of convergent validity; and, third, a temporal stability gap which suggests that self-reports, but not behavioural measures, show considerable temporal stability across periods of years. Risk preference, when measured through self-reports—but not behavioural tests—appears as a moderately stable psychological trait with both general and domain-specific components. We argue that future work needs to address the gaps that have emerged from the two measurement traditions and test their differential predictive validity for important economic, health and well-being outcomes. This article is part of the theme issue ‘Risk taking and impulsive behaviour: fundamental discoveries, theoretical perspectives and clinical implications’.

scholarly journals Risk Preference: A View from Psychology

2018 ◽  
Vol 32 (2) ◽  
pp. 155-172 ◽  
Author(s):  
Rui Mata ◽  
Renato Frey ◽  
David Richter ◽  
Jürgen Schupp ◽  
Ralph Hertwig
Keyword(s):  
Predictive Validity ◽  
Convergent Validity ◽  
Risky Behavior ◽  
Stated Preference ◽  
Risk Preferences ◽  
Temporal Stability ◽  
Risk Preference ◽  
Economic Research ◽  
Emotional States ◽  
Psychological Trait

Psychology offers conceptual and analytic tools that can advance the discussion on the nature of risk preference and its measurement in the behavioral sciences. We discuss the revealed and stated preference measurement traditions, which have coexisted in both psychology and economics in the study of risk preferences, and explore issues of temporal stability, convergent validity, and predictive validity with regard to measurement of risk preferences. As for temporal stability, do risk preference as a psychological trait show a degree of stability over time that approximates what has been established for other major traits, such as intelligence, or, alternatively, are they more similar in stability to transitory psychological states, such as emotional states? Convergent validity refers to the degree to which different measures of a psychological construct capture a common underlying characteristic or trait. Do measures of risk preference all capture a unitary psychological trait that is indicative of risky behavior across various domains, or do they capture various traits that independently contribute to risky behavior in specific areas of life, such as financial, health, and recreational domains? Predictive validity refers to the extent to which a psychological trait has power in forecasting behavior. Intelligence and major personality traits have been shown to predict important life outcomes, such as academic and professional achievement, which suggests there could be studies of the short- and long-term outcomes of risk preference— something lacking in current psychological (and economic) research. We discuss the current empirical knowledge on risk preferences in light of these considerations.

scholarly journals Improved Rice Technology Adoption: The Role of Spatially-Dependent Risk Preference

Agriculture ◽  
2021 ◽  
Vol 11 (8) ◽  
pp. 691
Author(s):  
Omotuyole Isiaka Ambali ◽  
Francisco Jose Areal ◽  
Nikolaos Georgantzis
Keyword(s):  
Field Experiments ◽  
Climatic Factors ◽  
Risk Preferences ◽  
Risk Preference ◽  
Probit Model ◽  
Climatic Conditions ◽  
High Yield ◽  
Risk Attitudes ◽  
Policy Action ◽  
Rice Varieties

This study analyses farmers’ adoption of improved rice technology, taking into account farmers’ risk preferences; the unobserved spatial heterogeneity associated with farmers’ risk preferences; farmers’ household and farm characteristics; farm locations, farmers’ access to information, and their perceptions on the rice improved varieties (i.e., high yield varieties, HYV). The study used data obtained from field experiments and a survey conducted in 2016 in Nigeria. An instrumental-variable probit model was estimated to account for potential endogenous farmers’ risk preference in the adoption decision model. Results show that risk averse (risk avoidant) farmers are less likely to adopt HYV, with the spatial lags of farmers’ risk attitudes found to be a good instrument for spatially unobserved variables (e.g., environmental and climatic factors). We conclude that studies supporting policy action aiming at the diffusion of improved rice varieties need to collect information, if possible, on farmers’ risk attitudes, local environmental and climatic conditions (e.g., climatic, topographic, soil quality, pest incidence) in order to ease the design and evaluation of policy actions on the adoption of improved agricultural technology.

Respondents in Asian Cultures (e.g., Chinese) are More Risk-Seeking and More Overconfident than Respondents in Other Cultures (e.g., in United States) but the Reciprocal Predictions are in Total Opposition: How and Why?

2004 ◽  
Vol 4 (2) ◽  
pp. 263-292 ◽  
Author(s):  
Shu Li ◽  
Yongqing Fang
Keyword(s):  
United States ◽  
Social Network ◽  
Risk Taking ◽  
Risk Preferences ◽  
Risk Preference ◽  
Cross Cultural ◽  
Cultural Variations ◽  
Risk Seeking ◽  
The Social ◽  
Predicted Risk

AbstractTriggered by rather surprising findings that respondents in Asian cultures (e.g., Chinese) are more risk-seeking and more overconfident than respondents in other cultures (e.g., in United States) and that the reciprocal predictions are in total opposition, four experiments were designed to extend previous collective-culture oriented researches. Results revealed that (1) Singapore 21, which is a vision of Singapore in the 21st century and has highlighted the promotion of a collective culture, did not advocate greater risk-seeking but led to weaker overconfidence; (2) the knowledge of "financial help from social network" did not permit prediction of risk preference but the knowledge of "the value difference between possible outcomes" did; (3) the social network could be viewed not only as a positive "cushion" but also as a negative "burden" in both gain and loss domains of risky choices; (4) the predictions of the risk-as-value, risk-as-feelings and stereotype hypotheses were not consistent with the predicted risk preferences of others but the predictions of the economic-performance hypothesis were consistent with the predicted risk preferences as well as the predicted overconfidence of others. The implications for cross-cultural variations in overconfidence and for cross-cultural variations in risk-taking were discussed.

scholarly journals Designing Research With Qualitative Comparative Analysis (QCA): Approaches, Challenges, and Tools

2017 ◽  
Vol 49 (2) ◽  
pp. 356-386 ◽  
Author(s):  
Eva Thomann ◽  
Martino Maggetti
Keyword(s):  
Comparative Analysis ◽  
External Validity ◽  
Qualitative Comparative Analysis ◽  
Internal Validity ◽  
Specific Research ◽  
Extant Literature ◽  
Specific Mode ◽  
Research Context ◽  
Trade Offs ◽  
Conducting Research

Recent years have witnessed a host of innovations for conducting research with qualitative comparative analysis (QCA). Concurrently, important issues surrounding its uses have been highlighted. In this article, we seek to help users design QCA studies. We argue that establishing inference with QCA involves three intertwined design components: first, clarifying the question of external validity; second, ensuring internal validity; and third, explicitly adopting a specific mode of reasoning. We identify several emerging approaches to QCA rather than just one. Some approaches emphasize case knowledge, while others are condition oriented. Approaches emphasize either substantively interpretable or redundancy-free explanations, and some designs apply an inductive/explorative mode of reasoning, while others integrate deductive elements. Based on extant literature, we discuss issues surrounding inference with QCA and the tools available under different approaches to address these issues. We specify trade-offs and the importance of doing justice to the nature and goals of QCA in a specific research context.

scholarly journals Trade-offs between temporal stability and level of forest ecosystem services provisioning under climate change

2018 ◽  
Vol 28 (7) ◽  
pp. 1884-1896 ◽  
Author(s):  
Katharina Albrich ◽  
Werner Rammer ◽  
Dominik Thom ◽  
Rupert Seidl
Keyword(s):  
Climate Change ◽  
Ecosystem Services ◽  
Forest Ecosystem ◽  
Temporal Stability ◽  
Trade Offs ◽  
Forest Ecosystem Services

The Performance of Time-Preference and Risk-Preference Measures in Surveys

2021 ◽  
Author(s):  
Joshua Tasoff ◽  
Wenjie Zhang
Keyword(s):  
Time Preference ◽  
Risk Preferences ◽  
Risk Preference ◽  
Time Preferences ◽  
Self Report ◽  
Data Set ◽  
Financial Decisions ◽  
Wide Range ◽  
Substantial Heterogeneity ◽  
Report Measure

Time preferences and risk preferences play an important role in a wide range of behavior, including financial decisions, entrepreneurship, and the proper incentivizing of agents. Numerous methods have been developed to measure these preferences hypothetically in surveys, but they have yielded inconsistent results. We analyze a panel data set in which subjects have collectively answered more than 400 surveys including 15 time-preference and 36 risk-preference elicitations. We evaluate the performance of these measures using the criteria of (1) ability to predict economically important behavior and (2) distinctness from other observables. We find substantial heterogeneity in the predictiveness of the measures. The best performing measure for time-preference is a titration method, in which a sequence of adaptive binary-choice questions narrows in on a subject’s indifference point, and for risk-preference it is a self-report measure of risk aversion. Using factor analysis, we find that time preferences are well explained by a single factor, but risk preferences load on multiple factors. However, the first factor loads almost entirely on self-reported risk-preference measures, and this factor explains much of the variation. The evidence can help inform researchers about which elicitation methods to include in their surveys. This paper was accepted by Yan Chen, decision analysis.

Modeling heterogeneous risk preferences

2017 ◽  
Vol 77 (2) ◽  
pp. 324-336 ◽  
Author(s):  
Zhengfei Guan ◽  
Feng Wu
Keyword(s):  
Design Methodology ◽  
Absolute Risk ◽  
Risk Preferences ◽  
Risk Preference ◽  
Economic Behavior ◽  
Empirical Estimation ◽  
Agricultural Producers ◽  
Content Type ◽  
General Production ◽  
Production Decision

Purpose The purpose of this paper is to propose a general framework for modeling heterogeneous risk preferences of agricultural producers and identifying the underlying factors that affect risk preferences. Design/methodology/approach This paper nests the risk preference function in a general production decision framework to test and model producers’ risk preferences. The framework allows for both production and price risk, and accommodates potential inefficient behavior. Panel data and the GMM method are used in the empirical estimation. Findings The results in this study confirmed the hypothesis of heterogeneous risk preferences. Farmers are found to have decreasing absolute risk aversion. Both farmer characteristics and socioeconomic factors have significant impact on producers’ risk preferences. The results suggest that ignoring heterogeneity in risk preferences across individuals and how non-wealth variables could affect farmers’ risk preferences could result in biased economic behavior analysis. Originality/value It is generally assumed in the literature that risk preferences are homogeneous among farmers at given wealth. This is a strong assumption and there are abundant evidences that suggest otherwise. This paper makes contributions to the literature by proposing an approach to modeling heterogeneous risk preferences and identifying the factors that affect preferences.

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