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Evaluating lotteries, risks, and risk-mitigation programs


Wang, Mei; Fischbeck, Paul S (2008). Evaluating lotteries, risks, and risk-mitigation programs. Journal of Risk Research, 11(6):775-795.

Abstract

Two experiments were designed to explore the existence of systematic differences in risk perceptions and risk attitudes between Chinese and US participants. The first experiment involved ranking monetary lotteries using measures of perceived riskiness and willingness to pay (WTP). Several simple heuristics were evaluated to predict perceived riskiness and WTP. Using WTP responses, Cumulative
Prospect Theory functions were determined for participants from both countries. The second experiment involved ranking multi-attribute real-world risks and associated risk-mitigation programs using measures of concern and preference,respectively. Compared to their US counterparts, Chinese participants are found to be less risk averse, more concerned about risks with higher catastrophic potential, and more in favor of risk-mitigation programs with greater scope of benefit. The results also reveal higher within-group agreement by Chinese participants for all tasks. For both national groups, the within-group agreement was highest when ranking risk-mitigation programs, but lowest when ranking lotteries with negative expected value. The implications of cross-cultural versus cross-task variation are discussed.

Abstract

Two experiments were designed to explore the existence of systematic differences in risk perceptions and risk attitudes between Chinese and US participants. The first experiment involved ranking monetary lotteries using measures of perceived riskiness and willingness to pay (WTP). Several simple heuristics were evaluated to predict perceived riskiness and WTP. Using WTP responses, Cumulative
Prospect Theory functions were determined for participants from both countries. The second experiment involved ranking multi-attribute real-world risks and associated risk-mitigation programs using measures of concern and preference,respectively. Compared to their US counterparts, Chinese participants are found to be less risk averse, more concerned about risks with higher catastrophic potential, and more in favor of risk-mitigation programs with greater scope of benefit. The results also reveal higher within-group agreement by Chinese participants for all tasks. For both national groups, the within-group agreement was highest when ranking risk-mitigation programs, but lowest when ranking lotteries with negative expected value. The implications of cross-cultural versus cross-task variation are discussed.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:2008
Deposited On:27 Feb 2009 12:04
Last Modified:21 Nov 2017 13:51
Publisher:Taylor & Francis
ISSN:1366-9877
Publisher DOI:https://doi.org/10.1080/13669870801967259

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