Decision under risk: From the field to the lab and back

Fox, C., Erner, C., & Walters, D. (forthcoming). Few topics attract as much attention across the social and behavioral sciences as risk. Enter “risk” as a search term in Google or in the books section at Amazon, and you will turn up more results than searches for terms such as “judgment,” “decision,” or even “happiness.” Despite all of this interest, most lay people, professionals, and clinical researchers understand risk very differently than do decision theorists. For instance, the Oxford English Dictionary defines risk as “exposure to the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility.” That accords with the clinical definition of risk which includes behaviors that can result in loss or harm to oneself or others such as skydiving, recreational drug use, and unprotected sex (e.g., Furby & Beyth-Marom, 1992; Steinberg, 2008), and it likewise accords with the view of managers who see risk as exposure to possible negative outcomes (March & Shapira, 1987). Psychometric studies of risk intuitions similarly implicate exposure to potential dangers, revealing a dread component that is characterized by lack of control or potential catastrophic consequences, and an unknown component that is characterized by unobservable, unknown, or delayed consequences (Slovic, 1987).

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Subjective knowledge in consumer financial decision making

Hadar, L., Sood, S., and Fox, C.R. (2013) * The authors propose that attempts to increase consumers’ objective knowledge (OK) regarding financial instruments can deter willingness to invest when such attempts diminish consumers’ subjective knowledge (SK). In four studies, the authors use different SK manipulations and investment products to show that investment decisions are influenced by…

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Absolute versus relative likelihood

Fox, C. R., Levav, J. * In this paper we investigate how people construct absolute and relative likelihood judgments. We document systematic violations of two fundamental probability axioms that can occur when evidence for an event H and its complement not-H are stronger than evidence for another event L and its complement not-L. First, H is…

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Decreasing ventromedial prefrontal cortex activity during sequential risk-taking

Schonberg, T., Fox, C.R., Mumford, J.A., Congdon, E., Trepel, C. and Poldrack, R.A. (2012) Decreasing ventromedial prefrontal cortex activity during sequential risk-taking: An fMRI investigation of the balloon analog risk task. Frontiers in Neuroscience, 6:80, doi: 10.3389/fnins.2012.00080

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