Risk defusing in decision making: prevention or intervention?

Abstract

In choices between gambles, utilities and probabilities of consequences determine the decision. If in quasi-realistic risky tasks, decision makers can actively search for information, few search for probability information, and many search for risk-defusing operators (RDOs). RDOs are actions intended by the decision maker to be performed additionally to a specific alternative, with the intention to decrease the risk. For the presented experiment the distinction of two types of RDOs is relevant: A Prevention RDO prevents the occurrence of a negative event that causes a negative outcome. An Intervention RDO does not prevent the negative event but interrupts the causal mechanism between negative event and negative outcome. Forty Eight subjects made decisions in three quasi-realistic task. In two of three tasks, this preference can be attributed to the casual structure of RDO.

Acknowledgment

We would like to thank Odilo W. Huber, Siegfried Macho, and Michael Schulte-Mecklenbeck for their comments on an earlier version of the manuscript and two anonymous reviewers.

Notes

¹The search for probability information is independent from whether a decision maker chooses a risky alternative or a non-risky one. This independence rules out the alternative explanation that people do not search for probability information because they choose the non-risky alternative anyway. Another alternative explanation would be that people do not search for probability information because they generally introduce or infer probabilities from their background knowledge. Huber and Macho (2001) demonstrated that subjects did not introduce or infer usable probability information in four different quasi-realistic tasks. Therefore, this alternative explanation can be discarded as a general one. For a more elaborate discussion, see Huber (in press).

In each row, N = 24 in each task. For the mean, N = 72.

In each row, N = 24 in each task for each type of RDO. for the mean, N = 72 for each type of RDO.