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A Survey Study of Factors Influencing Risk Taking Behavior in Real World Decisions under Uncertainty

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  • Rata Cristina

    (IESE BUSINESS SCHOOL)

  • Baucells Alibés Manel

    (UNIVERSITY OF NAVARRA)

Abstract

With 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.

Suggested Citation

  • Rata Cristina & Baucells Alibés Manel, 2006. "A Survey Study of Factors Influencing Risk Taking Behavior in Real World Decisions under Uncertainty," Working Papers 201033, Fundacion BBVA / BBVA Foundation.
    • Handle: RePEc:fbb:wpaper:201033
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    Cited by:

    1. L. Robin Keller, 2007. "From the Editor..," Decision Analysis, INFORMS, vol. 4(3), pages 111-113, September.
    2. repec:grz:wpsses:2017-05 is not listed on IDEAS
    3. François Desmoulins-Lebeault & Luc Meunier, 2018. "Moment Risks: Investment for Self and for a Firm," Decision Analysis, INFORMS, vol. 15(4), pages 242-266, December.
    4. Philip Bromiley, 2009. "A Prospect Theory Model of Resource Allocation," Decision Analysis, INFORMS, vol. 6(3), pages 124-138, September.
    5. L. Robin Keller, 2010. "From the Editor..," Decision Analysis, INFORMS, vol. 7(3), pages 235-237, September.
    6. L. Robin Keller & Kelly M. Kophazi, 2009. "From the Editors..," Decision Analysis, INFORMS, vol. 6(2), pages 53-56, June.
    7. Lorentziadis, Panos L., 2016. "Optimal bidding in auctions from a game theory perspective," European Journal of Operational Research, Elsevier, vol. 248(2), pages 347-371.
    8. 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.
    9. L. Robin Keller, 2011. "Investment and Defense Strategies, Heuristics, and Games: From the Editor ..," Decision Analysis, INFORMS, vol. 8(1), pages 1-3, March.
    10. Manel Baucells & Rakesh K. Sarin, 2013. "Determinants of Experienced Utility: Laws and Implications," Decision Analysis, INFORMS, vol. 10(2), pages 135-151, June.
    11. Ranjit Singh & Jayashree Bhattacharjee & K. Kajol, 2024. "Factors Affecting Risk Perception in Respect of Equity Shares: A Social Network Analysis Approach," Vision, , vol. 28(3), pages 386-399, June.
    12. L. Robin Keller, 2009. "From the Editor..," Decision Analysis, INFORMS, vol. 6(3), pages 121-123, September.
    13. Rakesh K. Sarin & L. Robin Keller, 2013. "From the Editors ---Group Decisions, Preference Elicitation, Experienced Utility, Survival Probabilities, and Portfolio Value of Information," Decision Analysis, INFORMS, vol. 10(2), pages 99-102, June.
    14. Huber, Jürgen & Palan, Stefan & Zeisberger, Stefan, 2019. "Does investor risk perception drive asset prices in markets? Experimental evidence," Journal of Banking & Finance, Elsevier, vol. 108(C).
    15. Alen Nosić & Martin Weber, 2010. "How Riskily Do I Invest? The Role of Risk Attitudes, Risk Perceptions, and Overconfidence," Decision Analysis, INFORMS, vol. 7(3), pages 282-301, September.

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