Risk-defusing and the initial attractiveness of alternatives

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Risk-defusing and the initial attractiveness of
alternatives

• Arlette S. Baer
• Odilo W. Huber
• Oswald Huber
• arlette.baer_at_unifr.ch
• FUR XII 2006 / Roma

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Outline

• Theoretical considerations
• Risk Defusing Operator (RDO)
• Pre-event RDO
• Post-event RDO
• Study
• Main research question
• Hypothesis
• Method
• Results
• Discussion

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Theoretical Considerations

• Representational coherence
• In experiments with quasi-realistic scenarios,
  decision behaviour differs in two main respects
  from that in decisions among gambles
• The majority of decision-makers usually are not
  actively interested in probability information
• Often, risk-defusing behaviour plays a central
  role in the decision process (O. Huber, R. Wider
  O. W. Huber, 1997 O. Huber O. W. Huber,
  2003b).

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Risk Defusing Operator

• A risk defusing operator (RDO) is an action
  intended by the decision maker to be performed in
  addition to a specific alternative and is
  expected to decrease the risk (O. Huber, Beutter,
  Montoya O. W. Huber, 2001 O. Huber, 2004 in
  press).

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• Pre-event RDO
• Example Vaccination

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• Post-event RDO
• Example Medical treatment

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Study

• Research QuestionIn the present experiment the
  following main research question has been
  investigated Does the initial appraisal of the
  attractiveness of the alternatives influence the
  search for risk defusing operators?

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• Hypothesis
• The attractiveness of alternatives as given in an
  initial scenario description influences the
  active search for risk defusing operators
• we expect enhanced search for more attractive
  alternatives
• we expect subjects to further evaluate
  alternatives that appear to be promising trough
  an initial appraisal

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Method

• Participants
• 60 subjects (5 non-students of different
  professions and 55 students)
• Independent Variables
• Initial attractiveness of the alternative
  (attractive versus non-attractive)
• Three quasi-naturalistic scenarios
• TV-concept (Warm-up scenario)
• Pygmäenmaki (monkeys)
• Packet enterprise
• Dependent Variables
• Search for risk defusing operators
• Decision

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• Decision Scenarios
• Each scenario consists of
• a short description of the risky scenario
• two risky alternatives
• positive consequencestwo levels positive and
  very positive
• possible negative consequencestwo levels
  negative and very negative

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• Method of Active Information Search
• The subject is given a description of the risky
  scenario.
• The subject then can get additional information
  by asking questions to the experimenter.
• The experimenter answers a question by providing
  information in printed form (O. Huber, Wider O.
  W. Huber, 1997).

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Manipulation of the initial attractiveness
Variation of negative vs. positive consequences.
Example shows conditions Alternative (Alt) A
superior
Condition Uncertain Consequences Alt A Alt B
Both constant favor A positive
Both constant favor A negative - --
Pos constant 1 positive
Pos constant 1 negative - --
Pos constant 2 positive
Pos constant 2 negative - --
Neg constant 1 positive
Neg constant 1 negative - -
Neg constant 2 positive
Neg constant 2 negative -- --
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Ambiguous Condition
Condition Uncertain Consequences Alt A Alt B
Ambiguous positive
Ambiguous negative - --
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Results
For the initially attractive alternative
participants search massively more often for risk
defusing operators than for the initially
non-attractive alternative.
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If participants search for a risk defusing
operator and find an acceptable one, they choose
the alternative (96.3 with search in attractive
alternative initially non-attractive
alternative 86.7).
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Discussion

• This experiment supplies three elementary
  results
• A. The manipulation of the attractiveness both by
  variation of the positive consequences and the
  possible negative consequences is effective.
• B. In the initially attractive alternative
  decision makers search more often for risk
  defusing operators than in the initially
  non-attractive alternative. In the ambiguous
  condition we assumed the decision maker to search
  more often for risk defusing operators in the
  alternative with less negative consequences due
  to loss aversion we expected the difference in
  positive consequences not to neutralize loss
  aversion. Actually, decision makers evaluate
  the alternative with less possible negative
  consequences as more attractive.

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Discussion

• C. Successful search for a risk defusing operator
  is a good predictor for choice. This result
  agrees with previous results (Huber et al., 2001
  Huber and Bär, in press). These results confirm
  the assumption that evaluation and elaboration of
  the representation in the decision process arent
  separated phases. This assumption is
  contradictory to Prospect Theory which assumed
  two separated phases (Kahneman Tversky, 1979
  Tversky Kahneman, 1992).

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• Thank you for your attention
• arlette.baer_at_unifr.ch