how to assess risk taking lect 6

Question 1

what is risk propensity

Answer 1

decision makers tendency to take or avoid risk

Question 2

what are the measures of risk propensity

Answer 2

1.single item
2.multiple items
3.scenarios
4.behavioural measures

Question 3

single items

Answer 3

Dohmen 2011
-asks about general willingness to engage in risky activity

Question 4

dohmen item’s characteristics for single items

Answer 4

-easy to administer
-research shows it is a robust predictor of risk taking behaviour (josef)
-used mostly on traditional real life economic risky choices
-widely used in large scale studies
-have been variations

Question 5

single items study

Answer 5

-in germany over 22000 pp
-qs example: are youi generally a person who is fully preapred to take risks or do you generally avoid taking risks
0= not at all willing to take risks, 10 = very willing to take risks
-understanding was that the single item/ no. on the scale assesses their willingness to take risks without the need for mathematical calculations

Question 6

results of single items study

Answer 6

-large variance
-7% of indiv chose 0, small fraction chose 10
-willingness to take risks decreases steadily with age for men
-for women it decreases more rapidly from late teens to 30, then remains flat until decreasing from mid 50s

Question 7

multiple items study

Answer 7

Dohmen, on 2000 pp
-how would you rate your willingness to take risks in the following areas? A financial matters B occupation C in leisure and sports
-5 point response scale

Question 8

results of multiple items study

Answer 8

-risk propensity declined with age
-men more likely to take either general or domain specific risks
-men and women did not show same decrease in willingness to take risks across lifespan

Question 9

limitations of single and multiple items

Answer 9

-multiple items, other domains not explored e.g health and social
-domain qs were abstract, no concrete examples of financial occupational etc risks
-vagueness and lack of clarity may produce sig random measurement error
-further investigation needed

Question 10

self report measure as a measure of risk propensity

Answer 10

-Blais and Weber developed 90 item self report called domain specific risk taking scale (DOSPERT)
-looks at 5 domains: ethical, financial, health/safety, recreational and social
-evaluated diff components that sig explain proportion of domain specific variability in risk taking

Question 11

self report measure results

Answer 11

-in financial and recreational domains, age inversely associated with risk propensity
-financial, health/safety, recreational domains: men reported greater risk propensity than women
-interaction between age and gender (financial and recreational) explains tendency for young men to display greater risk propensity than women and people of diff ages
-in social domain, women aged 40+ show increase in risk taking

Question 12

scenarios

Answer 12

tversky and kahneman 1981
-one of first measures to evaluate risky choices in context of gains and losses
-Mayhorn: people tend to choose safe option when choices are positively phrased and risky options when framed in terms of losses
-Bruine de Bruin developed adult decision making competence measure (A-DMC)
-scenarios purpose was to replicate previous findings so looked only at financial and recreational domains

Question 13

results of scenarios

Answer 13

-age inversely associated with financial risk taking in both gain and losses domain
-men reported greater financial risk taking when choices worded as gains
-sig interaction between age and gender

Question 14

scenarios conclusion

Answer 14

-prospect theory = risk averse when outcomes framed as gains
-these results are OPPOSITE
-young men inclined to forego safe options in gain domain to maximise financial outcomes
(consistent with evolutionary perspective that young men follow high risk high reward strategy)
-financial risks serve to accumulate both wealth and status

Question 15

behavioural measures of risk propensity

Answer 15

-mostly implements financial risk taking e.g balloon analogue risk task (BART) by Lejuez
-BART associated with personality traits like sensation seeking etc
-performance investigated related to risks like smoking, heavy drinking etc
-total score is average no of pumps before balloon bursts
-higher score = greater risk propensity
-pp inflate balloons as much as they can, not sure when they will pop