Research in risky decision making has shown that choices between gambles with monetary outcomes often reflect around the status quo: preferences are "risk averse" in the gain domain and "risk seeking" in the loss domain. These "economic" risk attitudes are based on an a priori definition of risk: riskier gambles are those with greater variance. We contrast economic risk attitudes with "perceived-risk" attitudes in which the decision maker defines the riskiness of gambles. Those who choose a gamble they judge as less risky than another gamble are perceived-risk averters, and those who choose a gamble they judge as riskier are perceived-risk seekers. We presented subjects with pairs of gambles and obtained both choices and judgments of relative riskiness. We replicated earlier results with economic risk attitudes by showing that the most frequent overall pattern was risk averse preferences in the gain domain and risk seeking preferences in the loss domain. When we examined perceived-risk attitudes in the same set of data, we found that the most frequent overall pattern was perceived-risk aversion in both domains. Perceived-risk attitudes do not tend to reflect in the eye of the beholder. These risk attitudes show considerably more stability across domains than do economic risk attitudes.
Mellers, B., A. Schwartz, and Elke Weber. "Do risk attitudes reflect in the eye of the beholder?" In Choice, decision, and measurement: Essays in honor of R. Duncan Luce, 59-73. Ed. A.A.J. Marley. Mahwah, NJ: Psychology Press, 1997.
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