Unrealistic optimism and decision making
One of the leading descriptive theories of decision-making under risk, Tversky & Kahneman's Prospect theory, reveals that normative explanation of decisionmaking, based only on principle of maximizing outcomes expected utility, is unsustainable. It also underlines the effect of alternat...
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| Format: | Article |
| Language: | English |
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Drustvo Psihologa Srbije
2009-01-01
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| Series: | Psihologija |
| Subjects: | |
| Online Access: | http://www.doiserbia.nb.rs/img/doi/0048-5705/2009/0048-57050904567B.pdf |
| _version_ | 1819208210537512960 |
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| author | Božović Bojana Gvozdenović Vasilije |
| author_facet | Božović Bojana Gvozdenović Vasilije |
| author_sort | Božović Bojana |
| collection | DOAJ |
| description | One of the leading descriptive theories of decision-making under risk, Tversky & Kahneman's Prospect theory, reveals that normative explanation of decisionmaking, based only on principle of maximizing outcomes expected utility, is unsustainable. It also underlines the effect of alternative factors on decision-making. Framing effect relates to an influence that verbal formulation of outcomes has on choosing between certain and risky outcomes; in negative frame people tend to be risk seeking, whereas in positive frame people express risk averse tendencies. Individual decisions are not based on objective probabilities of outcomes, but on subjective probabilities that depend on outcome desirability. Unrealistically pessimistic subjects assign lower probabilities (than the group average) to the desired outcomes, while unrealistically optimistic subjects assign higher probabilities (than the group average) to the desired outcomes. Experiment was conducted in order to test the presumption that there's a relation between unrealistic optimism and decision-making under risk. We expected optimists to be risk seeking, and pessimist to be risk averse. We also expected such cognitive tendencies, if they should become manifest, to be framing effect resistant. Unrealistic optimism scale was applied, followed by the questionnaire composed of tasks of decision-making under risk. Results within the whole sample, and results of afterwards extracted groups of pessimists and optimists both revealed dominant risk seeking tendency that is resistant to the influence of subjective probabilities as well as to the influence of frame in which the outcome is presented. |
| first_indexed | 2024-12-23T05:35:46Z |
| format | Article |
| id | doaj.art-ecde20f84ac14d67a7a5bc4e4f364198 |
| institution | Directory Open Access Journal |
| issn | 0048-5705 |
| language | English |
| last_indexed | 2024-12-23T05:35:46Z |
| publishDate | 2009-01-01 |
| publisher | Drustvo Psihologa Srbije |
| record_format | Article |
| series | Psihologija |
| spelling | doaj.art-ecde20f84ac14d67a7a5bc4e4f3641982022-12-21T17:58:20ZengDrustvo Psihologa SrbijePsihologija0048-57052009-01-0142456758410.2298/PSI0904567BUnrealistic optimism and decision makingBožović BojanaGvozdenović VasilijeOne of the leading descriptive theories of decision-making under risk, Tversky & Kahneman's Prospect theory, reveals that normative explanation of decisionmaking, based only on principle of maximizing outcomes expected utility, is unsustainable. It also underlines the effect of alternative factors on decision-making. Framing effect relates to an influence that verbal formulation of outcomes has on choosing between certain and risky outcomes; in negative frame people tend to be risk seeking, whereas in positive frame people express risk averse tendencies. Individual decisions are not based on objective probabilities of outcomes, but on subjective probabilities that depend on outcome desirability. Unrealistically pessimistic subjects assign lower probabilities (than the group average) to the desired outcomes, while unrealistically optimistic subjects assign higher probabilities (than the group average) to the desired outcomes. Experiment was conducted in order to test the presumption that there's a relation between unrealistic optimism and decision-making under risk. We expected optimists to be risk seeking, and pessimist to be risk averse. We also expected such cognitive tendencies, if they should become manifest, to be framing effect resistant. Unrealistic optimism scale was applied, followed by the questionnaire composed of tasks of decision-making under risk. Results within the whole sample, and results of afterwards extracted groups of pessimists and optimists both revealed dominant risk seeking tendency that is resistant to the influence of subjective probabilities as well as to the influence of frame in which the outcome is presented.http://www.doiserbia.nb.rs/img/doi/0048-5705/2009/0048-57050904567B.pdfprospect theoryrisk seeking/averse behavioroutcome framesubjective probabilitiesunrealistic optimism |
| spellingShingle | Božović Bojana Gvozdenović Vasilije Unrealistic optimism and decision making Psihologija prospect theory risk seeking/averse behavior outcome frame subjective probabilities unrealistic optimism |
| title | Unrealistic optimism and decision making |
| title_full | Unrealistic optimism and decision making |
| title_fullStr | Unrealistic optimism and decision making |
| title_full_unstemmed | Unrealistic optimism and decision making |
| title_short | Unrealistic optimism and decision making |
| title_sort | unrealistic optimism and decision making |
| topic | prospect theory risk seeking/averse behavior outcome frame subjective probabilities unrealistic optimism |
| url | http://www.doiserbia.nb.rs/img/doi/0048-5705/2009/0048-57050904567B.pdf |
| work_keys_str_mv | AT bozovicbojana unrealisticoptimismanddecisionmaking AT gvozdenovicvasilije unrealisticoptimismanddecisionmaking |