Using Means Objectives to Present Risk Information

Candice H. Huynh () and Jay Simon ()
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Candice H. Huynh: Technology and Operations Management, College of Business Administration, California State Polytechnic University, Pomona, California 91768
Jay Simon: Kogod School of Business, American University, Washington, DC 20016

Decision Analysis, 2016, vol. 13, issue 2, 117-127

Abstract: When making decisions involving alternatives with risk, individuals are often unable to express or view the possible outcomes in terms of a fundamental objective. In many cases, using a means objective is more practical or more accessible. However, to apply information about a means objective correctly, a decision maker must first translate it into information about a fundamental objective. This paper presents and discusses the results of two experiments regarding decision makers’ preferences and decision process when information is presented either in terms of a means objective or a fundamental objective. We find that individuals are somewhat more likely to choose a risky alternative when information is expressed in terms of means objectives than in terms of fundamental objectives, and that this difference is not significantly smaller among individuals with greater quantitative ability. Individuals are also better able to articulate their decision process when given information related to fundamental objectives than they are with information related to means objectives. In addition, we find that individuals who focus on the uncertainty involved in a decision are more likely to choose a sure thing, whereas individuals who focus on consequences are more likely to choose a gamble.

Keywords: means objectives; risk attitude; risk communication; risk information (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ordeca:v:13:y:2016:i:2:p:117-127

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