Method for Studying Perception of Risk

Abstract

Eight specially constructed scenarios were given to 28 masters and senior students in management. Their perceptions of the riskiness of each scenario were recorded. An analysis of variance indicated a significant interaction among three factors; the decision environment, the decision maker's cognitive style, and the risk-information contained in the situation. The decision environment is the setting in which the decision is made. In this study the setting is operationalized by the Gorry and Scott-Morton (2) Decision Framework. Cognitive style is the way a decision maker prefers to perceive and evaluate information. The Myers-Briggs Type Indicator was used to measure cognitive style. Risk-information comes from those numerical sources used to evaluate risk, in this study standard deviation and skewness. This research suggests that any method for studying risk perception must include situational and individual factors as well as the traditional risk measures.