Risk Preference: A View from Psychology

Mata, Rui; Frey, Renato; Richter, David; Schupp, Jürgen; Hertwig, Ralph

doi:10.1257/jep.32.2.155

Cited by 222 publications

(205 citation statements)

References 81 publications

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“…For choices between monetary gambles, for which no data were available with retest intervals longer than 5 years, correlations of about 0.2 were observed (with considerable variation around this estimate; fig. 1a in Mata et al [8]). For self-report measures, by contrast, the corresponding test-retest correlations were around 0.5; in addition, this substantially higher level of stability in the self-report measures appears not to decline further across a 10-year period.…”

Section: The Temporal Stability Gapmentioning

confidence: 90%

“…Or do the measures 'make' the construct-do two distinct constructs surface if these measures are employed simultaneously? Recent years have seen considerable efforts to assess the operation and implications of these measures, including their convergent validity [5]; their temporal stability [5,8]; their associations with personality traits and demographic characteristics such as age, gender and cognitive abilities [37,38]; and their genetic basis [39,40]. In what follows, we describe three major findings involving measures stemming from both traditions that each suggest an incongruity to be addressed.…”

Section: Two Measurement Traditions: Revealed and Stated Preferencesmentioning

confidence: 99%

“…One measure often used to quantify temporal stability is the test -retest reliability of an individual's risk preferences; this makes it possible to quantify the extent to which the same rank ordering of individuals is preserved across two measurement time points. In a recent meta-analysis of studies reporting test-retest correlations of risk-preference measures, Mata et al [8] found a substantial temporal divergence of behavioural and selfreport measures. For choices between monetary gambles, for which no data were available with retest intervals longer than 5 years, correlations of about 0.2 were observed (with considerable variation around this estimate; fig.…”

Section: The Temporal Stability Gapmentioning

confidence: 99%

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Three gaps and what they may mean for risk preference

Hertwig

Wulff

Mata

2018

Phil. Trans. R. Soc. B

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Risk preference is one of the most important building blocks of choice theories in the behavioural sciences. In economics, it is often conceptualized as preferences concerning the variance of monetary payoffs, whereas in psychology, risk preference is often thought to capture the propensity to engage in behaviour with the potential for loss or harm. Both concepts are associated with distinct measurement traditions: economics has traditionally relied on behavioural measures, while psychology has often relied on self-reports. We review three important gaps that have emerged from work stemming from these two measurement traditions: first, a description–experience gap which suggests that behavioural measures do not speak with one voice and can give very different views on an individual's appetite for risk; second, a behaviour–self-report gap which suggests that different self-report measures, but not behavioural measures, show a high degree of convergent validity; and, third, a temporal stability gap which suggests that self-reports, but not behavioural measures, show considerable temporal stability across periods of years. Risk preference, when measured through self-reports—but not behavioural tests—appears as a moderately stable psychological trait with both general and domain-specific components. We argue that future work needs to address the gaps that have emerged from the two measurement traditions and test their differential predictive validity for important economic, health and well-being outcomes. This article is part of the theme issue ‘Risk taking and impulsive behaviour: fundamental discoveries, theoretical perspectives and clinical implications’.

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Section: The Temporal Stability Gapmentioning

confidence: 90%

Section: Two Measurement Traditions: Revealed and Stated Preferencesmentioning

confidence: 99%

Section: The Temporal Stability Gapmentioning

confidence: 99%

See 1 more Smart Citation

Three gaps and what they may mean for risk preference

Hertwig

Wulff

Mata

2018

Phil. Trans. R. Soc. B

Self Cite

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“…Unsurprisingly then, risk preferences are widely studied in experimental economics; personality, cognitive, and clinical psychology; and even animal personality research. [1][2][3][4] Measures of risk preference can help predict a wide range of behaviours, from smoking and pathological gambling 5 to self-employment and holding stocks. [6][7][8][9] Two very different measurement traditions have investigated risk preferences in humans.…”

Section: Introductionmentioning

confidence: 99%

How people know their risk preference

Arslan¹,

Brümmer²,

Dohmen³

et al. 2019

Preprint

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People differ in their willingness to take risks. Recent work found that a dominant class of measures, revealed preference tasks (e.g., laboratory lotteries), appear not to tap into stable individual differences, whereas survey-based stated preferences are stable and predict real-world risk taking across different domains. How can stated preferences, often criticised as inconsequential ("cheap talk"), be more valid and predictive than controlled, incentivized lotteries? In our multi-method study, over 3,000 respondents from population samples answered a single widely used and predictive risk preference question. Respondents then explained the reasoning behind their answer. They tended to recount diagnostic behaviours and experiences, focusing on voluntary, consequential acts and experiences from which they seemed to infer their risk preference. We found that third-party readers of respondents' brief memories and explanations reached similar inferences about respondents' preferences, indicating the intersubjective validity of this information. Our results also shed light on the process of preference formation through experience over the lifespan. Finally, stated risk preferences may capture preferences revealed in behaviours in the wild better than the contrived behavioural tasks preferred in economics because they permit people to draw upon their own understanding of what constitutes diagnostic behaviours and experiences.

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“…That all risk measures (also called revealed preferences) not necessarily relate to self‐reported risk taking in everyday life has been highlighted by recent research (Frey, Pedroni, Mata, Rieskamp, & Hertwig, ). Finding behavioral and self‐reported measures of risk taking that reflect a common underlying risk factor has thus been argued to be an important current task for the field (Mata, Frey, & Richter, ). In order to examine this, participants were measured on a self‐reported measure of risk preferences in everyday life: the Risk Propensity Scale (RPS: Nicholson, Soane, Fenton‐O’Creevy, & Willman, ).…”

Section: Introductionmentioning

confidence: 99%

Detailed analysis of skin conductance responses during a gambling task: Decision, anticipation, and outcomes

et al. 2019

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Physiological arousal is considered a key factor of gambling behavior. Hence, to understand gambling behavior it is important to study the arousal responses during gambling. Moreover, crucial mechanisms of action could be uncovered by detailing the situations that produce an arousal response. A gamble, or bet, can be partitioned into three distinct phases: (a) decision phase, during which the information concerning the gamble is presented, outcomes are appraised, and a decision is made on how to gamble; (b) anticipation phase, during which the result of the gamble is awaited; (c) outcome phase, during which the outcome of the gamble is presented. Previous research on arousal responses to gambling have mostly measured tonic changes in arousal, and when phasic responses have been measured, analyses have generally concentrated on one of the gamble phases. The aim of the present study was to map the arousal responses during gambling in more detail by measuring skin conductance responses (SCRs) during all three gamble phases of a simple card game. The anticipation phase was found to produce the largest arousal response, suggesting anticipation to be a major contributor to arousal during gambling behavior. Risk behavior during the gambling task was mirrored in self‐reported risk taking in everyday life, and risk‐takers displayed smaller SCRs compared to nonrisk‐takers during decision making, suggesting this as a possible biomarker for risk‐taking individuals.

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Risk Preference: A View from Psychology

Cited by 222 publications

References 81 publications

Three gaps and what they may mean for risk preference

Three gaps and what they may mean for risk preference

How people know their risk preference

Detailed analysis of skin conductance responses during a gambling task: Decision, anticipation, and outcomes

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