The Evidence for Consistent Individual Differences: Influence of Pay-offs, Probabilities, and Framing in Risky Decision Making

By:
Sunitha Narendran
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The aim of this paper is to examine the consistency of individual differences in the extent to which decision-makers are influenced by variables key to mainstream risk research: payoffs, probabilities, and framing. One hundred and twelve participants were presented with a series of risk scenarios. In each case they were asked to indicate their willingness to take a relatively risky instead of a relatively safe option. The magnitude of the payoff of the risky option (low versus high), the probability of the success of the risky option (low versus high), and whether the probability was framed positively (e.g. 50% likelihood of success) or negatively (50% chance of failure), was systematically manipulated across the 16 presentations. Four months later, participants were presented with the same 16 scenarios, this time in a different order. Analysis of responses to the scenarios indicated evidence of substantial individual differences in the degree to which participants were influenced by variation in payoffs, probabilities, and framing. The correlations between the influence of probabilities and framing across the two administrations of the scenarios were strong, and the corresponding correlation for payoffs was of moderate strength. It is concluded that these findings strengthen the argument that a full understanding of decision-making requires an understanding of individual differences, as well as a nomothetic, approach to theory and research. The findings of the study has implications for risk communication and risk management.


Keywords: Risk Behaviour, Decision Making, Individual Differences
Stream: Economic Sustainability
Presentation Type: 30 minute Paper Presentation in English
Paper: A paper has not yet been submitted.

Sunitha Narendran

Principal Lecturer, Faculty of Business and Law, Kingston University
Kingston, Surrey, UK

Sunitha teaches on a on several undergraduate and postgraduate courses offered by the University. Sunitha worked in a managerial capacity in several multinational corporations based in India before moving into management education in 1987. She has been a member of the academic faculty at Universities such as the Bangalore University, MARA, the management development institute based in Kuala Lumpur for civil servants and public sector managers and the National University of Singapore. Her research interests focus on the psychology of risky decision making and cross-cultural analysis of risk behaviour. She has published in a range of academic journals, including and the Journal of Social Psychology and the Journal of Trans-National Management Development. She has also reviewed articles for the Asia Pacific Journal of Management and the Asian Case Research Journal. She is currently working towards a PhD in Occupational Psychology at Birkbeck College, University of London.

Ref: S07P0033