How do people know how much risk they can stomach? Revealing people’s strategies for determining their own risk preferences

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Abstract

How does one decide whether to wilfully engage in a risky activity, such as going white-water rafting, taking illicit drugs, or gambling at a casino? Within a psychological risk-return framework, people are purported to evaluate and then integrate the rewards they expect to receive from engaging in an activity with any risks they perceive. Individual differences in risk taking have been interpreted in terms of differences in the magnitude of risk perceived or reward expected and in terms of a person’s trade-off between the reward expected and risk perceived. Yet little is known about what mental strategies people use to evaluate the potential rewards and risks associated with activities and for their integration. I will present data from studies in which participants were asked to explain how they arrived at their evaluations of the rewards they expected and the risks they perceived when evaluating whether they would engage in risky activities. The findings reveal large individual differences in the strategies and sources of information (e.g., intuition, imagination) that people report using when evaluating a risky activity. These strategies and information sources speak to the possible cognitive processes underlying evaluation and information integration during risky decision making. Individual differences in the use of strategies and information sources may contribute to differences in the magnitude of risks perceived and rewards expected as well as their trade-off during risky decision making. I will conclude that investigating people’s mental strategies can yield valuable insights in individual differences in risk preference.

The Speaker

Jonathan Rolison is a senior lecturer in the Department of Psychology at the University of Essex. His main areas of research include individual differences in risk taking behaviour, the perception and communication of risk information, and road safety behaviour.