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Decision Making: Psychological Perspective

In: Risk Tolerance in Financial Decision Making

Author

Listed:
  • Gianni Brighetti
  • Cristina Ottaviani
  • Valeria Nucifora
  • Rosita Borlimi

Abstract

In general, risk perception is the subjective judgement that people make about the characteristics and severity of a risk. In physiology, perception is a detectable change in the internal or external environment. But what is risk? The concept is highly complex. There are many definitions of risk, which vary by specific application and situational context. Fear is a clear example of what we think about risk in terms of our intuitive feelings. In all the definitions, the emphasis is on the negative nature of the consequences. Risk is any situation where negative or adverse outcomes cannot be ruled out. Neither do we know that they will happen, nor can we guarantee that they won’t.

Suggested Citation

  • Gianni Brighetti & Cristina Ottaviani & Valeria Nucifora & Rosita Borlimi, 2011. "Decision Making: Psychological Perspective," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Caterina Lucarelli & Gianni Brighetti (ed.), Risk Tolerance in Financial Decision Making, chapter 5, pages 133-152, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-0-230-30382-9_6
    DOI: 10.1057/9780230303829_6
    as

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