A Fundamental Prediction Error: Self-Others Discrepancies in Risk Preference
Christopher K. Hsee
University of Chicago - Booth School of Business
Elke U. Weber
Columbia Business School - Management & Psychology
Journal of Experimental Psychology, Vol. 126, No. 1, 1997
This research examined whether people can accurately predict the risk preferences of others.Three experiments featuring different designs revealed a systematic bias: that participants predicted others to be more risk seeking than themselves in risky choices, regardless of whether the choices were between options with negative outcomes or with positive outcomes. This self-others discrepancy persisted even if a monetary incentive was offered for accurate prediction. However, this discrepancy occurred only if the target of prediction was abstract and vanished if the target was vivid. A risk-as-feelings hypothesis was introduced to explain these findings.
Number of Pages in PDF File: 9
Keywords: risk preference, risk attitude, self-other difference, prediction, false consensus
JEL Classification: D81, D11, D12, D91
Date posted: October 11, 2006
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