Chapter 12 - Summary Judgment and Decision Making PDF

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BUS473 Chapter 12 Risk -

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Starr – used cost-benefit analysis to quantify the levels of risk that people were willing to take; but, it was found that people’s assessment of risk is not based on a straightforward comparison of risks and benefits Voluntary/involuntary factor relates to people’s acceptable levels of risk Two basic dimensions of risk:  Unknown Risk: associated with factors such as being novel unobservable and having delayed consequences  Dread Risk: associated with the feeling of dread, catastrophic consequences and fatal consequences Factors underlying the two dimensions of risk:  Voluntary vs involuntary risk o People are willing to tolerate a higher level of risk when it is seen as voluntary  Catastrophic potential  Known vs unknown risks o More concerned about unknown risks than known risks; if it’s known, they can try to prevent it  Perceptions of control o Willing to accept a higher level of risk for things they perceive they have control over Existence of various institutions suggests that people’s feelings play a large role in their judgments  Risk-as-feelings Model: states that cognitions and emotions not only influence each other, but each can also act independently on behaviour Social Amplification of Risk: concerns the way in which psychological, social and cultural processes interact so as to amplify/attenuate perceptions of risk When risk perception is taken into account, risk taking turns out to be more stable: people who take risks in one domain are more likely to take risks in other domains Variation in risk taking related to personality factors (Big 5)  Sensation seeking strongly associated with risk taking  Sex and race associated with different levels of risk taking When people feel safer, they take more risks Risk Compensation: when individuals vary in their propensity to take risks  The more risks a person takes, the greater the number of rewards and losses they incur  When people’s perceptions of risk are increased, they should take less risks...