Implications for Risk Taking Behavior Leading to Crashes or Disasters-Effects of Perceived Risk on Risk Taking Decision

Abstract

The aim of this study was to investigate the effects of the outcome in a risk averse sure option and the perceived risk of the worst outcome on risk taking behaviors and to get insights into prevention of disasters or crashes caused by risk taking. Because of cognitive biases to optimistically underestimate a risk, it is generally difficult to recognize rationally a risk and its consequence leading to a disaster or crash. Therefore, the recognition of the gap between the perceive risk and the real risk is a very important issue, because such a gap might cause risk taking behaviors or decisions, leading to a disaster or crash. Using three decision-making situations with different scenarios, we measured the perceived risk at which the decision changed from a risk averse alternative to a risk taking one as a function of the outcome in a sure risk averse alternative and the frame (positive or negative frame in a scenario of decision making). The perceived risk at which the decision shifted from a risk averse alternative to a risk taking one decreased with the increase of the outcome in a risk averse alternative. The perceived risk was lower when the decision-making scenario was positively framed. Irrespective of the difference of decision-making scenarios, there existed a self-reported risk (probability) that changed a decision from a risk averse alternative to a risk taking one. Applying the framework of decision making of this study to a few cases of crashes or disasters, some implications for preventing disasters or crashes were given.

Keywords

• Crash or disaster
• irrational behavior
• perceived risk
• risk averse
• risk taking
• outcome of sure alternative