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Risk-defusing in decisions by probability of detection of harm and promotion and prevention focus

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  • Kirchler, Erich
  • Hoelzl, Erik
  • Huber, Oswald

Abstract

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 individuals - independent 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.

Suggested Citation

  • Kirchler, Erich & Hoelzl, Erik & Huber, Oswald, 2010. "Risk-defusing in decisions by probability of detection of harm and promotion and prevention focus," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(5), pages 595-600, October.
    • Handle: RePEc:eee:soceco:v:39:y:2010:i:5:p:595-600
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    References listed on IDEAS

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    1. Mohammed Abdellaoui & R. Duncan Luce & Mark J. Machina & Bertrand Munier (ed.), 2007. "Uncertainty and Risk," Theory and Decision Library C, Springer, number 978-3-540-48935-1, March.
    2. Holler, Marianne & Hoelzl, Erik & Kirchler, Erich & Leder, Susanne & Mannetti, Lucia, 2008. "Framing of information on the use of public finances, regulatory fit of recipients and tax compliance," Journal of Economic Psychology, Elsevier, vol. 29(4), pages 597-611, August.
    3. Crowe, Ellen & Higgins, E. Tory, 1997. "Regulatory Focus and Strategic Inclinations: Promotion and Prevention in Decision-Making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 69(2), pages 117-132, February.
    4. Huber, Oswald & Macho, Siegfried, 2001. "Probabilistic set-up and the search for probability information in quasi-naturalistic decision tasks," Risk, Decision and Policy, Cambridge University Press, vol. 6(1), pages 1-16, April.
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    Cited by:

    1. Ranyard, Rob & McHugh, Sandie, 2012. "Defusing the risk of borrowing: The psychology of payment protection insurance decisions," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 738-748.
    2. Kirk, Colleen P. & McSherry, Bernard & Swain, Scott D., 2015. "Investing the self: The effect of nonconscious goals on investor psychological ownership and word-of-mouth intentions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 186-194.

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