ERIC Number: EJ688576
Record Type: Journal
Publication Date: 2004-Apr
Pages: 15
Abstractor: Author
ISBN: N/A
ISSN: ISSN-0033-295X
EISSN: N/A
Predicting Risk Sensitivity in Humans and Lower Animals: Risk as Variance or Coefficient of Variation
Weber, Elke U.; Shafir, Sharoni; Blais, Ann-Renee
Psychological Review, v111 n2 p430-445 Apr 2004
This article examines the statistical determinants of risk preference. In a meta-analysis of animal risk preference (foraging birds and insects), the coefficient of variation (CV), a measure of risk per unit of return, predicts choices far better than outcome variance, the risk measure of normative models. In a meta-analysis of human risk preference, the superiority of the CV over variance in predicting risk taking is not as strong. Two experiments show that people's risk sensitivity becomes strongly proportional to the CV when they learn about choice alternatives like other animals, by experiential sampling over time. Experience-based choices differ from choices when outcomes and probabilities are numerically described. Zipf's law as an ecological regularity and Weber's law as a psychological regularity may give rise to the CV as a measure of risk.
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Publication Type: Information Analyses; Journal Articles
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
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