A Survey Study of Factors Influencing Risk Taking Behavior in Real World Decisions under Uncertainty
AbstractWith the goal of investigating decision making under uncertainty in real world decisions, we conduct a survey requiring 261 subjects to describe recent real life decisions and to answer questions about several dimensions of a decision, including framing, status quo, domain, and type of consequences. The study shows that when real world decisions are framed as choices between a sure outcome and a risky alternativea key prediction of Prospect Theory holds, namely, that a losses framing increases risk taking behavior. The results also provide support for the need to include the domain of a decision as a factor influencing risk taking behavior. Risk attitudes do not vary across the three groups considered and do not depend on whether the type of consequences are monetary or not. While we observe that status quo has some influence in setting the framing, we confirm that framing, and not status quo, is the driver of the risk attitude.
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Bibliographic InfoPaper provided by Fundacion BBVA / BBVA Foundation in its series Working Papers with number 201033.
Date of creation: Feb 2006
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Real world decisions; risk taking behavior; framing; domain; type of consequence; status quo.;
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- Christopher Schwand & Rudolf Vetschera & Lea Wakolbinger, 2010. "The influence of probabilities on the response mode bias in utility elicitation," Theory and Decision, Springer, vol. 69(3), pages 395-416, September.
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