scholarly journals Taking unknown risks based on positive and negative information

2021 ◽  
Author(s):  
Amirhossein Tehranisafa ◽  
Atiye Sarabi-Jamab ◽  
Armin Maddah ◽  
AbdolHossein Vahabie ◽  
Babak N. Araabi ◽  
...  
Keyword(s):  
Risk Taking ◽  
Ambiguity Aversion ◽  
Risk Attitudes ◽  
Ambiguity Tolerance ◽  
Positive Evidence ◽  
Small Risk ◽  
Impact Risk ◽  
Partially Observable ◽  
Available Information ◽  
Full Probability

Many decisions have to be made under partial ambiguity where information is notavailable about the full probability distribution of risks. To decide in a principled way,one would have to make some assumption(s) about hidden risks. We examined howpeople may balance between the valence of the available information and the potentialinformation concealed by the ambiguity. Under partial ambiguity, people showedflexible skepticism towards the valence of the partially observable probabilisticinformation. When ambiguity size was small, risk taking was sensitive to valence: if theinformation was promising, ambiguity aversion increased, skeptically balancing thepromising prospects of available positive evidence against the hazards of what mightbe hidden from the view. Conversely, when the available information wasdisappointing, ambiguity tolerance increased, cautiously anticipating more than whatthe available information promised. This flexible skepticism was not a trivially reflexiveresponse to valence: when ambiguity was large (i.e., available information wasunreliable), the valence of available information did not impact risk attitudes.

The Multiple Faces of Risk-Taking

2016 ◽  
Vol 32 (1) ◽  
pp. 17-38 ◽  
Author(s):  
Florian Schmitz ◽  
Karsten Manske ◽  
Franzis Preckel ◽  
Oliver Wilhelm
Keyword(s):  
Risk Taking ◽  
Basic Research ◽  
Formal Models ◽  
Experimental Paradigm ◽  
Nomological Network ◽  
Balloon Analogue Risk Task ◽  
Parameter Recovery ◽  
Task Specificity ◽  
Available Information ◽  
Criterion Variables

Abstract. The Balloon-Analogue Risk Task (BART; Lejuez et al., 2002 ) is one of the most popular behavioral tasks suggested to assess risk-taking in the laboratory. Previous research has shown that the conventionally computed score is predictive, but neglects available information in the data. We suggest a number of alternative scores that are motivated by theories of risk-taking and that exploit more of the available data. These scores can be grouped around (1) risk-taking, (2) task performance, (3) impulsive decision making, and (4) reinforcement sequence modulation. Their theoretical rationale is detailed and their validity is tested within the nomological network of risk-taking, deviance, and scholastic achievement. Two multivariate studies were conducted with youths (n = 435) and with adolescents/young adults (n = 316). Additionally, we tested formal models suggested for the BART that decompose observed behavior into a set of meaningful parameters. A simulation study with parameter recovery was conducted, and the data from the two studies were reanalyzed using the models. Most scores were reliable and differentially predictive of criterion variables and may be used in basic research. However, task specificity and the generally moderate validity do not warrant use of the experimental paradigm for diagnostic purposes.

scholarly journals Chimpanzees (Pan troglodytes) Are More Averse to Social Than Nonsocial Risk

2018 ◽  
Vol 30 (1) ◽  
pp. 105-115 ◽  
Author(s):  
Sarah E. Calcutt ◽  
Darby Proctor ◽  
Sarah M. Berman ◽  
Frans B. M. de Waal
Keyword(s):  
Decision Making ◽  
Pan Troglodytes ◽  
Risk Taking ◽  
Trust Game ◽  
Risk Attitudes ◽  
Social Risk ◽  
Risky Decision ◽  
Emotional Factors ◽  
Economic Decision Making ◽  
Tit For Tat

Social risk is a domain of risk in which the costs, benefits, and uncertainty of an action depend on the behavior of another individual. Humans overvalue the costs of a socially risky decision when compared with that of purely economic risk. Here, we played a trust game with 8 female captive chimpanzees ( Pan troglodytes) to determine whether this bias exists in one of our closest living relatives. A correlation between an individual’s social- and nonsocial-risk attitudes indicated stable individual variation, yet the chimpanzees were more averse to social than nonsocial risk. This indicates differences between social and economic decision making and emotional factors in social risk taking. In another experiment using the same paradigm, subjects played with several partners with whom they had varying relationships. Preexisting relationships did not impact the subjects’ choices. Instead, the apes used a tit-for-tat strategy and were influenced by the outcome of early interactions with a partner.

How Does Crossing Roads with Friends Impact Risk Taking in Young Adolescents and Adults?

2019 ◽  
Vol 44 (6) ◽  
pp. 726-735 ◽  
Author(s):  
Elizabeth E O’Neal ◽  
Yuanyuan Jiang ◽  
Kathryne Brown ◽  
Joseph K Kearney ◽  
Jodie M Plumert
Keyword(s):  
Risk Taking ◽  
Road Safety ◽  
Significant Risk ◽  
Peer Influences ◽  
Young Adolescents ◽  
Movement Timing ◽  
The Road ◽  
Adolescents And Adults ◽  
Impact Risk ◽  
Road Crossing

Abstract Objective The goal of this investigation was to examine how crossing roads with a friend versus alone affects gap decisions and movement timing in young adolescents and adults. Methods Ninety-six 12-year-olds and adults physically crossed a single lane of continuous traffic in an immersive pedestrian simulator. Participants completed 30 crossings either with a friend or alone. Participants were instructed to cross the road without being hit by a car, but friend pairs were not instructed to cross together. Results Pairs of adolescent friends exhibited riskier road-crossing behavior than pairs of adult friends. For gaps crossed together, adult pairs were more discriminating in their gap choices than adult solo crossers, crossing fewer of the smaller gaps and more of the larger gaps. This pattern did not hold for 12-year-old pairs compared to 12-year-old solo crossers. To compensate for their less discriminating gap choices, pairs of 12-year-olds adjusted their movement timing by entering and crossing the road more quickly. For gaps crossed separately, both adult and 12-year-old first crossers chose smaller gaps than second crossers. Unlike adults, 12-year-old first crossers were significantly less discriminating in their gap choices than 12-year-old second crossers. Conclusions Compared to adults, young adolescents took riskier gaps in traffic when crossing virtual roads with a friend than when crossing alone. Given that young adolescents often cross roads together in everyday life, peer influences may pose a significant risk to road safety in early adolescence.

scholarly journals Impact of positive illusions and experience on decision to invest in own new venture

2021 ◽  
Vol 65 (3) ◽  
pp. 269-285
Author(s):  
Andrea Zelienková ◽  
Keyword(s):  
Risk Taking ◽  
Investment Decision ◽  
Illusion Of Control ◽  
Risk Attitudes ◽  
Positive Illusions ◽  
Unrealistic Optimism ◽  
Positive Events ◽  
Opportunity Evaluation ◽  
The Relationship ◽  
Process Macro

Objectives. The objective of this study is threefold: 1) to examine the effect of positive illusions on risk taking manifested in opportunity evaluation and investment decision; 2) to examine the mediating role of risk attitudes on the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision; 3) to examine the moderating effect of experience on the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision. Sample and setting. Research sample comprised 132 entrepreneurs aged between 19 and 63 (M = 40.6; SD = 10.8) owning small, medium, and large-sized businesses. Hypotheses. 1) Individuals exhibiting higher positive illusions (overconfidence, unrealistic optimism, illusion of control) would take higher risk manifested in opportunity evaluation and investment decision. 2) Risk attitudes will mediate the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision. 3) Experience will moderate the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision. Statistical analysis and results. 1) Using simple linear regression it was found that only unrealistic optimism for rare positive events and illusion of control predicted risk taking manifested in investment decision. None of positive illusions explained opportunity evaluation. 2) Using PROCESS macro for mediation analysis it was found that domain-specific risk perception, rather than general risk tolerance, is statistically significant mediator of the relationship between unrealistic optimism for rare positive events and investment decision. 3) Moderation analysis via PROCESS macro showed that only entrepreneurial experience moderates the relationship between unrealistic optimism for rare positive events and investment decision using own savings. The limitations concerning gender and domain specificity of methods are discussed in the study.

scholarly journals The Realization Effect: Risk-Taking After Realized Versus Paper Losses

2016 ◽  
Vol 106 (8) ◽  
pp. 2086-2109 ◽  
Author(s):  
Alex Imas
Keyword(s):  
Significant Influence ◽  
Risk Taking ◽  
Risk Attitudes ◽  
Choice Under Uncertainty ◽  
Existing Data

Understanding how prior outcomes affect risk attitudes is critical for the study of choice under uncertainty. A large literature documents the significant influence of prior losses on risk attitudes. The findings appear contradictory: some studies find greater risk-taking after a loss, whereas others show the opposite—that people take on less risk. I reconcile these seemingly inconsistent findings by distinguishing between realized versus paper losses. Using new and existing data, I replicate prior findings and demonstrate that following a realized loss, individuals avoid risk; if the same loss is not realized, a paper loss, individuals take on greater risk. (JEL D11, D14, D81, G11)

scholarly journals Thirty Years of Prospect Theory in Economics: A Review and Assessment

2013 ◽  
Vol 27 (1) ◽  
pp. 173-196 ◽  
Author(s):  
Nicholas C Barberis
Keyword(s):  
Prospect Theory ◽  
Risk Taking ◽  
Empirical Work ◽  
Theoretical Work ◽  
Economic Behavior ◽  
Risk Attitudes ◽  
Mainstream Economic ◽  
Decision Under Risk ◽  
The Past ◽  
Excellent Description

In 1979, Daniel Kahneman and Amos Tversky, published a paper in Econometrica titled “Prospect Theory: An Analysis of Decision under Risk.” The paper presented a new model of risk attitudes called “prospect theory,” which elegantly captured the experimental evidence on risk taking, including the documented violations of expected utility. More than 30 years later, prospect theory is still widely viewed as the best available description of how people evaluate risk in experimental settings. However, there are still relatively few well-known and broadly accepted applications of prospect theory in economics. One might be tempted to conclude that, even if prospect theory is an excellent description of behavior in experimental settings, it is less relevant outside the laboratory. In my view, this lesson would be incorrect. Over the past decade, researchers in the field of behavioral economics have put a lot of thought into how prospect theory should be applied in economic settings. This effort is bearing fruit. A significant body of theoretical work now incorporates the ideas in prospect theory into more traditional models of economic behavior, and a growing body of empirical work tests the predictions of these new theories. I am optimistic that some insights of prospect theory will eventually find a permanent and significant place in mainstream economic analysis.

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