Risk-attitude

An important theme to this review is that people respond to food crises differently. We can still, however, achieve a reasonable degree of predictability by segmenting them into somewhat homogeneous groups based—not on demographics—but on a person s risk perceptions and risk attitude. For every crisis there will be accountable, concerned, conservative, and alarmist segments of consumers. Knowing their relative size will enable us to better predict the effectiveness of different interventions. 

Behavior related to food crises is based on risk perceptions and on risk attitudes related to the crisis (Wildavsky and Dake, 1990). This section focuses on how these can be combined to influence behavior. When examining how people form attitudes, it is useful to examine biotechnology. It can best illustrate how attitudes are formed under conditions of uncertainty (Tait, 1988). 

Risk perceptions refer to a consumer s estimate of how likely they will be exposed to the content of the risk ( I have a 1 in 100,000 chance of contracting a BSE-related disease if I eat beef ). Risk attitude reflects a consumer s general predisposition to risk in a consistent way. It is important to emphasize that risk attitude and risk perception are two different concepts. Whereas risk attitude deals with a consumer s interpretation of the content of the risk and how much he or she dislikes it, risk perception deals with a consumer s interpretation of the likelihood of being exposed to the content of the risk. 

While both a consumer s risk attitudes and risk perceptions individually influence their behavior, it has been shown—in the context of BSE—that it is the combination of risk attitude and risk perception that has the biggest influence on behavior (Pennings et al., 2002). That is, regardless of one s risk attitude, there will be no change in one s behavior if a person perceives no risk in a situation. However, if a person does believe a behavior has some risk involved (such as eating beef during the BSE scare), it is their attitude toward risk (it is worth the risk to eat beef vs. it is not worth the risk) that eventually determined their behavior and not simply their assessment of the risk itself. 

When risk-averse consumers perceive risk, they will exhibit risk management behavior (behavior that decreases risk exposure). However, when riskseeking consumers perceive risk, they will exhibit risky behavior or seek out ways to increase their risk (because of the corresponding payoff). The interaction between risk attitude and risk perception represents how one intends to cope with risks in the channel combined with the risks their actions generate. 

It has been claimed that people s perceptions of risk and benefit associated with particular products and applications will determine acceptance (Frewer et al., 1998 Slovic, 1987, 1993). This is not the case the acceptance of a product is determined by a combination of both risk perceptions and risk attitudes. 

By decoupling risk response behavior into the separate components of risk perception and risk attitude, a more robust conceptualization and prediction of consumer reactions are possible. The insights that result from decoupling risk perceptions and risk attitudes can yield important implications. Consider the two following outcomes from a program of research by Pennings et al. (2002) ... 

Outcome 2. Suppose, however, that risk attitude is the true driver behind a consumer s reaction to a food safety scare. In such a case, even if probabilities of being exposed to the risk are small, an effective communication of these probabilities will have little influence on a consumer s behavior. Instead, marketers will have to focus on ways to eliminate the risk. This may involve a total recall or an elimination of the risk (slaughtering of all potentially infected cattle or recall of all potentially tainted food). 

FIG. 9 Risk perceptions drive Dutch consumption of beef, but risk attitudes drive German consumption of beef. 

Risk may be perceived differently across societal groups, and how consumers cope with perceived risk will depend on their risk attitude. Before a person is able to respond to risk, risk must first be perceived (Trimpop, 1994). Stone et al. (1994) modeled the identification of risks as a cognitive process of identification, storage, and retrieval. The level of risk that a food-related behavior provides depends on the consumer s risk perception (Sparks et al., 1995). 

The way marketers respond to food crises should take into account whether a country s food consumption is influenced more by risk perceptions or by risk attitudes. The relative influence of risk perception and risk attitude on consumption depends, among others, on the accuracy of knowing the probability that negative health side effects could occur from eating food products. 

Pennings, J.M.E. and Wansink, B. 2005. Channel contract behavior The role of risk attitudes, risk perceptions, and channel member market structures. J. Busi. 78, 167-181. 

Fourfold pattern Tversky and Fox1 showed a common pattern of risk seeking and risk aversion observed in choices between simple prospects as follows. C(x, P) is the median certainty equivalent of the prospect (x, P). The Fourfold (a) in Table 6.1 shows that the median participant is indifferent between receiving a certain 14 and a 5% chance of receiving 100. Because the expected value of this prospect is only 5, this observation reflects risk seeking. The Fourfold (a)-(e) in Table 6.1 illustrates a fourfold pattern of risk attitude risk seeking for gains and risk aversion... 

Therefore, we distinguish three categories of risks for a practicable and rational risk evaluation (see Fig. 1) the normal area, the intermediate area, and the intolerable area (area of permission) (cf. also Piechowski, 1994). The normal area is characterized by relatively low statistical uncertainty, rather low probability of occurrence, rather low extent of damage, high certainty of assessment, low persistency and ubiquity of risk consequences, and low irreversibility of risk consequences, and the risks iUso have low complexity or empirically proven adequacy. In this case the objective risk dimensions almost correspond to the scientific risk evaluation. For risks in the normal area we follow the recommendations of decision-making analysts who take a neutral risk attitude as a starting point for collective binding decisions. 

Risk attitudes depend on personality, life experience, wealth, and other socioeconomic factors. By default, extremely risk-averse investors are not interested in buUding wealth via asset accumulation, because they are unwiUing to tolerate the risk necessary to obtain high returns. The opposite is true for adventurous souls ready to gamble for large payoffs. In this regard, old-money investors... 

Cairns, John. Undated. Risk Attitude and the Value of Life. Unpublished manuscript. 

The spread does not only reflect idiosyncratic features of the company but depends on general market factors a change of the political and/ or economic situation can alter the risk attitude of the market participants. Due to time varying risk components, the risk premium changes. 

Exhibit 27.4 shows the average portfolio weights (in percent) for different investment horizons and risk attitudes, divided into the rating segments AA, A, BBB, and T (columns 2 to 5) or the term structure 1-3 year, 3-7 year, 7-10 year, and 10Y+ (columns 6 to 9). The sum of the weights in columns 2 to 5 is 100%, as well as the sum of columns 6 to 9. Rows 3 and 4 contain the optimal weights for the 3-year horizon, rows 6 and 7 those of the five year, and rows 9 and 10 those of the 10-year horizon. 

The term structure changed with investment horizon and varying risk attitude the higher risk aversion, the greater the portion of corporates (due to their superior risk/return characteristics versus Treasuries in... 

EMA benefit-risk methodology project recommends the framework of PrOACT-URL, a generic framework that provides a generic problem structure to be considered when facing a decision problem (Hammond et al. 2002). The acronym PrOACT-URL represents the eight steps of this framework problems, objectives, alternatives, consequences, trade-offs, uncertainty, risk attitudes, and linked decisions. The first five elements (PrOACT) are very general and pertinent to any decision problem. The last three elements (URL) are more specific and address the uncertainties of the decisions. See IMI-PROTECT (2013) for details on this framework. 

The internal uncertainty can be better describedas ambiguity / imprecision in decision making and most of it is due to the uncertainty in problem data . It reflects the imprecision in human judgements preferences, values and risk attitudes. This uncertainty can stem from insufficient problem understanding, insufficient data, insufficient modelling, little acceptance of modelling assumptions, etc. 

In fuzzy control MOM and COA operators are widely adopted. The SOM and LOM operators are not used as often as others, due to the extreme bias. In the presented case study different operators express a decision maker s risk attitude. Based on the risk attitude. 

In the third step of fuzzy control model, further operators are consulted in order to calculate the final decision. Hereby the risk attitude of the decision maker is considered for the second time. By using different operators in the second and third step, the risk attitude of the decision maker can be made stronger or weaker. The result of the third step of frizzy control model is a crisp value. Based on the input values, a precise decision-making is possible. In this step also a sensitive analysis can be carried out by diversifying different operators. 

Any single method may not be adequate for evaluating the effectiveness of safety programs. The range of details may be too broad for one measure. Different measures may be suitable for accidents, injuries, illnesses, work conditions, risks, attitudes, behaviors, knowledge of workers, management support, and compliance with safety standards and company rules. Some companies devised their own evaluation system that uses several different measures. Assessment may become more difficult if different organizational units have very different operations and hazards. 

In addition to the agency attributes, all participants in the game were asked to answers some questions regarding their risk perception. We used two methods for risk assessment (1) a direct approach where participants were asked to define their risk attitude (risk averse, risk neutral. 

The Social Attitudes to Road Traffic Risk in Emope (SARTRE) project started in 1991. It consists of a European wide survey about knowledge of road traffic laws and road traffic risks, attitudes regarding road safety issues, repotted road traffic behaviors, transport habits and needs in several European countries. Variorrs topics related to road safety are the focus of the project such as alcohol, drags or phone use while driving, speeding, use of advanced driver assistance systems and the transport infrastructure and envirorunent. After the first edition of SARTRE, a follow-up was performed in 1996 (SARTRE2) and 2002 (SARTRE 3). For this fourth edition of the... 

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