Risk Attitude And Time Pressures On The Risk Decision-making Preference Reversal

Since Lichtenstein and Slovic found the preference reversal phenomenon in 1971, many psychologists and economists from different views verified and discussed the decision-making paradox which deviates from expect utility theory, and proved that preferences reversals phenomenon exists generally in real-life context. Subsequently, scholars began to discuss the occurrence reason of preferences reversals from personal characteristics, task material characteristics, and decision-making situations.Risk attitude, as a stable individual characteristic, affects people's risk decision. Weber, Blais and Betz (2002) thought that in uncertain decision situation, the biggest differences between individuals may be risk attitude. Xiong Yuanlai and He Guibing (2006) found that risk attitude really affects the preference reverse behavior. Edland, Svenson, and Slovic believed that time pressure is one of the main factors that affects individual decision performance during decision process. Therefore, based on the past research, we expanded the level of time pressure to further investigate time pressure how to influence individual preference reversal. But the influence of time pressure on the preference reversal is not sure. This study attempted to introduce risk attitude to further discuss effects of risk attitude on preference reversal in different time pressure level via two experiments.Two experiments were designed to explore the influence of risk attitude and time pressure on preference reversal. The experiments design is 3×3 between subjects. Independent variables were risk attitude (risk seeking, risk neutral, risk averse) and time pressure (high time pressure, low time pressure, no time pressure). In study 1, we discussed how risk attitude and time pressure affect preference reversal in win situation. Study 2, we investigated the effects of risk attitude and time pressure on preference reversal in loss situation. The dependent variables of the two experiments were both choosing and pricing behavior, preference reversals and reverse preference reversals. The results showed that:(1) No matter in win or loss situation, risk attitude has significant influence on preference reversal. In win situation, the frequency of preference reversals of subjects who are risk-neutral is more than that of subjects who are risk-seeking and risk-averse; and in loss situation, the situation is reverse, the frequency of preference reversals of subjects who are risk-seeking is more than that of subjects who are risk-neutral and risk-averse.(2) In win situation, time pressure has not significant influence on preference reversal and reverse preference reversal, but on subjects'pricing behavior, showed that subjects'in no time pressure were more preferred to give risk gambles higher price than subjects who in high and low time pressure. In loss situation, time pressure has significant influence on choosing behavior and reverse preference reversal, showed that subjects in no time pressure were more preferred than subjects who in high and low time pressure; and the frequency of subjects'reverse preference reversal were more than subjects who in low and no time pressure.(3) Both in win situation and in loss situation, risk attitude and time pressure has not interaction, which indicted that in different time pressure, the different risk attitude subjects showed relatively consistent preference reversal.