A Theory of Perceived Risk and Attractiveness

Abstract

People judged both the attractiveness and risk of lotteries to win or lose money. The lotteries were designed to test whether risk and attractiveness judgments show systematic deviations from the simple sum of probability-by-utility-products analogous to (S)EU theory. Our results led to an alternative combination rule for probability and outcome information, with a relative weight averaging component and a configural (i.e., sign- or rank-dependent) probability weighting component. Ratings of risk and attractiveness were negatively correlated, but the two tasks showed systematic differences in the rank order of judgments. Both judgments could be fit by the same configural relative weight averaging model, but with different parameters (especially the sign-dependent probability weighting functions). Risk judgments were more sensitive to the probability of losses and zero outcomes compared to attractiveness judgments, which were more sensitive to the probability of gains. There were individual differences on the extent of this difference in probability weights between risk and attractiveness judgments.