A Fundamental Prediction Error: Self-Others Discrepancies in Risk Preference

Journal of Experimental Psychology, Vol. 126, No. 1, 1997

9 Pages Posted: 11 Oct 2006  

Christopher K. Hsee

University of Chicago - Booth School of Business

Elke U. Weber

Columbia Business School - Management & Psychology

Abstract

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.

Keywords: risk preference, risk attitude, self-other difference, prediction, false consensus

JEL Classification: D81, D11, D12, D91

Suggested Citation

Hsee, Christopher K. and Weber, Elke U., A Fundamental Prediction Error: Self-Others Discrepancies in Risk Preference. Journal of Experimental Psychology, Vol. 126, No. 1, 1997. Available at SSRN: https://ssrn.com/abstract=930089

Christopher K. Hsee (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Elke U. Weber

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

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