Taking Precautions is Not the Same as Choosing Gambles: Prospect Theory and Use of Probability in Risky Choices

Kusev, P. (Speaker), Peter Ayton (Speaker), Paul van Schaik (Speaker), Nick Chater (Speaker)

Activity: Talk or presentation typesOral presentation

Description

In four experiments we studied precautionary decisions where participants decided whether or not to adopt a specified precaution with a known cost in the face of a described risk. We find that both the weighting function and the value function required to model these decisions exhibit different properties for precautionary decisions than those observed for choices between gambles.
Overweighting of probability is observed for moderate and high probabilities – a finding not anticipated by Prospect theory. Our results highlight a need for differentiation between models to account for precautionary behavior and models of other types of decision-making under risk\uncertainty.
Period17 Nov 2006
Held at27th Annual Conference of the Society for Judgment and Decision Making
Event typeConference
Conference number27
LocationHouston, United States, Texas
Degree of RecognitionInternational