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Most theoretical analyses of risky choices depict each option as a gamble that can yield various outcomes with different probabilities. [2] Widely accepted risk-aversion theories, including Expected Utility Theory (EUT) and Prospect Theory (PT), arrive at risk aversion only indirectly, as a side effect of how outcomes are valued or how probabilities are judged. [3]
The dual systems model proposes that mid-adolescence is the time of highest biological propensity for risk-taking, but that older adolescents may exhibit higher levels of real-world risk-taking (e.g., binge drinking is most common during the early 20s) [18] [19] not due to greater propensity for risk-taking but due to greater opportunity. [12]
The same change in price framed differently, for example as a $5 discount or as a $5 surcharge avoided, has a significant effect on consumer behavior. [16] Although traditional economists consider this " endowment effect ", and all other effects of loss aversion, to be completely irrational , it is important to the fields of marketing and ...
Daniel Kahneman, who won the 2002 Nobel Memorial Prize in Economics for his work developing prospect theory. Prospect theory is a theory of behavioral economics, judgment and decision making that was developed by Daniel Kahneman and Amos Tversky in 1979. [1] The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in ...
Factors of risk perceptions. Risk perception is the subjective judgement that people make about the characteristics and severity of a risk. [1] [2] [3] Risk perceptions often differ from statistical assessments of risk since they are affected by a wide range of affective (emotions, feelings, moods, etc.), cognitive (gravity of events, media coverage, risk-mitigating measures, etc.), contextual ...
In decision theory, the Ellsberg paradox (or Ellsberg's paradox) is a paradox in which people's decisions are inconsistent with subjective expected utility theory. John Maynard Keynes published a version of the paradox in 1921. [1] Daniel Ellsberg popularized the paradox in his 1961 paper, "Risk, Ambiguity, and the Savage Axioms". [2]
Combining the cultural theory of risk and the psychometric paradigm, cultural cognition, its exponents claim, remedies difficulties with each. [22] The mechanisms featured in the psychometric paradigm (and in social psychology generally) furnish a cogent explanation of why individuals adopt states of mind that fit and promote the aims of groups ...
Each influential factor is generally measured by asking questions through a survey. For example, Boer (2005) studied on intention of condom use to prevent from getting AIDS guided by protection motivation theory. The study asked the following questions to individuals: "If I do not use condoms, I will run a high risk of getting HIV/AIDS."