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The psychology of human risk preferences and vulnerability to scare-mongers: experimental economic tools for hypothesis formulation and testing
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Date
2016-10
Authors
Harrison, Glenn W.
Ross, Don
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Brill Academic Publishers
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Abstract
The Internet and social media have opened niches for political exploitation of human dispositions to hyper-alarmed states that amplify perceived threats relative to their objective probabilities of occurrence. Researchers should aim to observe the dynamic “ramping up” of security threat mechanisms under controlled experimental conditions. Such research necessarily begins from a clear model of standard baseline states, and should involve adding treatments to established experimental protocols developed by experimental economists. We review these protocols, which allow for joint estimation of risk preferences and subjective beliefs about probabilities and their distributions. Results we have obtained on such estimates, from populations in various countries, are gathered for comparison. Most people show moderate risk aversion in non-alarmed states. We also find universal heterogeneity in risk preference structures, with substantial sub-samples weighting probabilities in such a way as to display “probability pessimism” (rank dependent utility), while others make risky choices in accordance with expected utility theory.
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Keywords
Rank dependent utility , Heterogeneity of preference and belief structures , Security threats , Experimental economics , Expected utility theory , Human risk preferences , Subjective beliefs about probabilities
Citation
Harrison, G. W. and Ross, D. (2016) 'The psychology of human risk preferences and vulnerability to scare-mongers: experimental economic tools for hypothesis formulation and testing', Journal of Cognition and Culture, 16(5), pp. 383-414. doi:10.1163/15685373-12342185
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© 2016, Brill Academic Publishers. All rights reserved.