introduction to decision making under risk lect 6

Question 1

is risk based decision making becoming more or less popular

Answer 1

more, decision makers want to ensure their decisions are properly taken into account

Question 2

2 vital characteristics of risk based decision making

Answer 2

1.every decision involves uncertainty
2. the outcome of each decision counts

Question 3

sitkin and pablo

Answer 3

conceptual framework of risk taking behaviour
-risk perception can be influenced by factors such as priming

Question 4

history of risk

Answer 4

PALEOLITHIC PERIOD
-risk key to survival
-early people exposed to physical risk and poor weather cond to hunt for food
3200 BC
-societies dealt with risks likes goods transportation, war and diseases forming appropriate risk plans
-roman empire = plans established for cargo between merchants and traders
200 AD
-fall of roman empire, insurance contracts towards risk almost disappeared, resurfaced 12-14th century
RENAISSANCE
-pascal: formed principles of probability
-lloyds of london formed, issuing policies on risk

(history of risk lacked scientific evidence)

Question 5

what is risk

Answer 5

-an outcome that may occur with a certain probability
-it is a trait (risk propensity)
-during 20th century, fuller suggested the involvement of unconscious processes
-different terms proposed: hazard, danger and threat
-terms are negative while risk incorporates notion of uncertainty and is a much broader term
-Mirsha: all decisions involve a degree of risk

Question 6

what is risk propensity

Answer 6

-a decision maker’s current tendency to take or avoid risk
-it captures indiv differences in overall orientation toward risk taking behaviours

Question 7

advantages of risk propensity

Answer 7

+implications for theoretical modelling of risk taking behaviour (sitkin and pablo)
+provides insight uncovering mechanisms of risk taking
+an indiv trait which can change over time as a result of experience (Wang)
+findings show as indiv grow older, they become more risk averse (figner 2009)

Question 8

trimpop 1994 definition of risky behaviour

Answer 8

any consciously or unconsciously controlled behaviour with a perceived uncertainty about its outcome and/or its possible benefits or costs for physical, economic or psycho-social wellbeing of oneself or others

Question 9

what motivates us to take part in risk taking behaviour (RTB)

Answer 9

Tso et al
-expectation based on experience
-how quickly someone learns from environment
-how averse they are to losses
-general tolerance to risk
-how consistent or inconsistent they are when making decisions

Question 10

what does it mean to be a risk taker according to the literature

Answer 10

-impulsivity
-sensation seeking/thrilling
-nostalgia, low nostalgia = high risk
-boredom (high levels)
-emotional intelligence (moderate)
(we need a personality trait at some degree to take part in RTB)
(RTB can be intensified by other circumstances such as alcohol, drug abuse and social pressure)

Question 11

is RTB domain specific

Answer 11

-Slovic: questioned the assumption that RTB financially is a robust predictor of other types of RTB
-Weber 2002: attitudes towards risks should be treated as domain specific since decision makers demonstrate diff levels of RTB between diff domains (gambling vs finance etc)

Question 12

what factors are needed for RTB

Answer 12

-personality trait
-indiv differences
-risk

Question 13

what are some domains of RTB

Answer 13

social
health
finance
ethical
recreational