risk-defusing and the initial attractiveness of alternatives

University of Fribourg/SwitzerlandUniversity of Fribourg/Switzerland 11

Risk-defusing and the initial attractiveness of

alternativesArlette S. BaerOdilo W. HuberOswald Huber

[email protected] XII 2006 / Roma


OutlineOutline

Theoretical considerationsTheoretical considerations Risk Defusing Operator (RDO)Risk Defusing Operator (RDO)

Pre-event RDOPre-event RDO Post-event RDOPost-event RDO

StudyStudy Main research questionMain research question HypothesisHypothesis MethodMethod ResultsResults DiscussionDiscussion


Theoretical Considerations Representational coherenceIn 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).


Risk Defusing OperatorRisk 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).


Pre-event RDOPre-event RDO

Example: Example: VaccinationVaccination

Negative event Negative consequence

Risky decision situation

Before the negative event

Infection DieTrip to a tropical

country

Vaccination


Post-event RDOPost-event RDO

Example: Example: Medical treatmentMedical treatment

Negative event Negative consequence

Risky decision situation

after the negative event

Infection DieTrip to a tropical

country

Medical treatment


Research QuestionResearch 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?

StudyStudy


HypothesisHypothesisThe 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


MethodMethod Participants60 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


Decision ScenariosEach 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


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).


Manipulation of the initial attractiveness: Variation of negative vs. positive consequences. Example shows conditions Alternative (Alt) A superior

ConditionCondition Uncertain ConsequencesUncertain Consequences Alt AAlt A Alt BAlt B

Both constant favor ABoth constant favor A positivepositive ++++ ++

negativenegative -- ----

Pos constant 1Pos constant 1 positivepositive ++ ++


Pos constant 2Pos constant 2 positivepositive ++++ ++++


Neg constant 1Neg constant 1 positivepositive ++++ ++

negativenegative -- --

Neg constant 2Neg constant 2 positivepositive ++++ ++

negativenegative ---- ----


Ambiguous ConditionAmbiguous Condition

Condition Uncertain Consequences Alt A Alt B

Ambiguous positive + ++

negative - --


ResultsResults

0%

10%

20%

30%

40%

50%

60%

70%

80%

both constant 1 pos constant 1 pos constant 2 neg constant 1 neg constant 2 ambiguous

Search for risk defusing operators in the initially attractive vs. initially non-attractive alternative

no RDO-Search

RDO-Search in the initialattractive alternative

RDO-Search in the initialnon-attractive alternative

RDO-Search in bothalternatives

For the initially attractive alternative participants search massively more often for risk defusing operators than for the initially non-attractive alternative.


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%).

0

10

20

30

40

50

60

70

80

Ab

solu

tes

dat

a

no RDO-Search RDO-Search in theinitial attractive

alternative

RDO-Search in theinitial non-attractive

alternative

RDO-Search in bothalternatives

Risk defusing operators determine choice

Decision for the initialattractive alternative

Decision for the initial non-attractive alternative


DiscussionDiscussionThis 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.


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 aren’t separated phases. This assumption is contradictory to Prospect Theory which assumed two separated phases (Kahneman & Tversky, 1979; Tversky & Kahneman, 1992).

DiscussionDiscussion


Thank you for your attentionThank you for your attention

[email protected]@unifr.ch

risk-defusing and the initial attractiveness of alternatives

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