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NCJ Number: 154653 Add to Shopping cart Find in a Library
Title: Influence of Probability on Risky Choice: A Parametric Examination
Journal: Journal of Economic Behavior and Organization  Volume:17  Dated:(1992)  Pages:377-400
Author(s): P K Lattimore; J R Baker; A D Witte
Date Published: 1992
Page Count: 24
Sponsoring Agency: National Institute of Justice (NIJ)
Washington, DC 20531
National Science Foundation
Arlington, VA 22230
US Dept of Justice NIJ Pub
Washington, DC 20531
Type: Research (Applied/Empirical)
Format: Article
Language: English
Country: Netherlands
Annotation: This study proposes a parametric model of risky decisionmaking to explore the probability of risky choice.
Abstract: Preference models over gains and losses were estimated that explicitly allowed for subjective valuation of outcome levels and probabilities. The findings presented here are consistent with results reported in the literature which suggest that transformations of probabilities are common in risky decisionmaking. However, this research extends those findings by showing that behavior is significantly affected by the transformation of probabilities. Specifically, the findings indicate that, for most subjects, models which allow for transformation of objective probabilities provide significantly more explanatory power than models such as expected utility theory (EUT) which do not allow such a transform. The parametric model was useful here in providing insight on the extent of over- and underweighting probabilities, sensitivity to changes in probability, the impact of decision weights on risk-taking behavior, and the impact of outcomes on risk-taking behavior. 8 tables, 4 figures, 14 notes, 25 references, and 1 appendix
Main Term(s): Criminology
Index Term(s): Decisionmaking; Modeling techniques; Risk taking behavior
Note: NIJ Reprint Series
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