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Risk-defusing In Decisions With Multiple Alternatives
FUR XII ROMA 2006
Odilo W. Huber,Arlette Bär, Oswald HuberDepartment of Psychology
University of FribourgSwitzerland
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Outline
Behavior in quasi-naturalistic risky decisions
Risk Defusing Operator (RDO)
Study
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Quasi-naturalisitic risky scenario: Parcel enterprise
For some months now you are heading a dependance of a big parcel enterprise in a big city. However, your storage room is limited and you expect the number of parcels at christmas time to be too high to be handled easily. Thus you announce for additional storage room. You get 8 offers but you do not know neither the suitability nor possible risks.
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Behavior in quasi-naturalistic risky decisions
In experiments with quasi-realistic scenarios, decision behaviour
differs in two main respects from that in decisions among gambles:
1. The majority of decision-makers usually are not actively interested in probability information
2. 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).
Active and constructive behaviour, effort needed to invent action
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Research Questions
1. How do decision makers construct a representation of a quasi-naturalistic risky decision with multiple alternatives?
2. Role of risk defusing in the process?
Paradigm necessary that allows investigation of process and constructive acts of decision maker
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Method of Active Information Search AIS O. Huber, R. Wider & O. W. Huber (1997)
Presentation of the decision problem is actively controlled by the decision maker
information search
Sponataneous information needs investigated
No prestructuring of information by the experimenter
no dimension labels as in MDDM (e.g. mouselab)
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Method of Active Information Search AIS O. Huber, R. Wider & O. W. Huber (1997)
Information needs of decision maker allow inferences on
1. mental representation of decision problem
2. process of construction of mental representationProcess tracing method
Needs pre-experiments to test tasks and standardize answers
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Method of Active Information Search AIS O. Huber, R. Wider & O. W. Huber (1997)
Scenario
Question 1
Answer 1
Q. 2
A. 2
Q. n
A. n
etc.
Information given by experimenter
Actions of decision maker
DECISION
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Hypotheses
1. Process will be economic, i.e. subjects will try to limit information search.
2. Subjects will eliminate some alternatives based on possible positive consequences.
3. Exploration of risk and invention of RDOs only for remaining subset No resources are spent on risk control of less promising alternatives.
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Predicted Process
Decision
Exploration: positive consequences / suitability
Classification
Consideration of RDOs
Exploration: risks / negative consequences
Elimination
RDO-Search / invention
8 alternatives
Subset of alternatives
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Design
198 subjects
Independent Variables
1. Two quasi-naturalistic scenarios with 8 risky alternatives each
A. Pygmäenmaki (protection of endangered monkey species)
B. Parcel enterprise
2. Positive consequences (highly positive vs. positive; within tasks)
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Design continued
3. Initially presented information concerning alternatives (for all alternatives, 4, no information; one information item each)
4. Type of initially presented information concerning alternatives (positive consequences / suitability vs. possible risk / negative consequences or mixed)
3. and 4. allow testing of stability of proposed strategy under different initial information conditions (ante active search)Important for generalization of results
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Type of initially presented information
pos. cons very pos. cons neg. cons
Number of alternatives
with respective
information initially
presented
no information no information no information
no information no information 8
4 no information 4
no information 4 4
2 2 4
no information no information 8
no information no information no information
4 4 no information
no information no information 8
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Results
Majority of decisions (64.4%) predicted strategydecision makers first investigated positive consequences / suitability for all 8 alternatives and subsequently eliminated less positive alternatives, subsequently RDO search
Decision
Exploration: positive consequences / suitability
Classification
Consideration of RDOs
Exploration: risks / negative consequences
Elimination
RDO-Search / invention
8 alternatives
Subset of alternatives
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12.9% of decisions: first investigation of positive consequences, and then investigation of negative consequences without elimination of alternatives, subsequently RDO search.
Decision
Exploration: positive consequences / suitability
Classification
Consideration of RDOs
Exploration: risks / negative consequences
Elimination
RDO-Search / invention
ClassificationElimination
8 alternatives
Subset of alternatives
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10.4%: Elimation based on positive consequences, no RDO search.
Decision
Exploration: positive consequences / suitability
Classification
Consideration of RDOs
Exploration: risks / negative consequences
Elimination
RDO-Search / inventionConsideration of
negative consequences
8 alternatives
Subset of alternatives
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Results continued
12.3% Non-classified strategies
3.8% Probability search (combined with different strategies)
No difference between initial information conditions
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General Discussion
Proposed economical strategy is applied by a majority of the subjects in decision situations as investigated:
A. unknown suitability of multiple risky alternativesB. no presentation of dimension labels, no prestructuring of search process by experimentator
Elimination based on positive consequences early in process
Risk evalutation only for subset
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General Discussion
RDOs are central to decision: 89% of decisions
RDO invention is applied economically late in decision process for subset of alternatives.
Probability search plays minor role
22 different conditions as combinations of the 3 factors have been investigated Strategy is stable under different initial
information conditions.
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