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Beyond money: Risk preferences across both economic and non-economic contexts predict financial decisions

Author

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  • Crystal Reeck
  • O’Dhaniel A Mullette-Gillman
  • R Edward McLaurin
  • Scott A Huettel

Abstract

Important decisions about risk occur in wide-ranging contexts, from investing to healthcare. While an underlying, domain-general risk attitude has been identified across contexts, it remains unclear what role it plays in shaping behavior relative to more domain-specific risk attitudes. Clarifying the relationship between domain-general and domain-specific risk attitudes would inform decision-making theories and the construction of decision aids. The present research assessed the relative contribution of domain-general and domain-specific risk attitudes to financial risk taking. We examined risk attitudes across different decision domains, as revealed through a well-validated measure, the Domain-Specific Risk-Taking Scale (DOSPERT). Confirmatory factor analysis indicated that a domain-general risk attitude shaped responses across multiple domains, and structural equation modeling showed that this domain-general risk attitude predicted observed behavioral risk premiums in a financial decision-making task better than domain-specific financial risk attitudes. Thus, assessments of risk attitudes that include both economic and non-economic domains improve predictions of financial risk taking due to the enhanced insight they provide into underlying, domain-general risk preferences.

Suggested Citation

  • Crystal Reeck & O’Dhaniel A Mullette-Gillman & R Edward McLaurin & Scott A Huettel, 2022. "Beyond money: Risk preferences across both economic and non-economic contexts predict financial decisions," PLOS ONE, Public Library of Science, vol. 17(12), pages 1-12, December.
    • Handle: RePEc:plo:pone00:0279125
    DOI: 10.1371/journal.pone.0279125
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    References listed on IDEAS

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