Individual Risk Propensity and Risk Background

Main Article Content

Winston Moore
April Bernard
Osaretin Iyare


The paper considers the role that socio-psychological and socio-cultural factors play in individual decisions to take risk.  The study employs four main measures of risk propensity: the mean probability of engaging in an investment, insurance or everyday gamble and the amount that would be invested in a hypothetical lottery.  The study finds that gender had a significant influence on the probability of engaging in investment and everyday risk decisions, but a relatively insignificant impact on insurance decisions.  The most important risk background variables were experience in making gambling decisions and confidence in making investment decisions.  Similar results are obtained when the lottery-type measure of risk was employed.

Article Details



Ajzen, I. (1988). Attitudes, personality and behaviour. Chicago: Dorsey Press.

Ajzen, I. (1991). The theory of planned behaviour. Organizational Behavior and Human Decision Processes, 50, 179-211.

Atkin, M. and D. Mansoor (1990). Stock markets in developing countries: key issues and a research agenda. Policy Research Working Paper Nos. 515, World Bank, Washington, DC.

Bettman, J.R. (1973). “Perceived Risk and its Components: A Model and Empirical Test,” Journal of Market Research, Vol. 10, pp. 184-190.

Blais, A-R. and Weber, E.U. (2006). A domain-specific risk-taking (DOSPERT) scale for adult populations. Judgement and Decision Making, 1, 33-47.

Coombs, C.H. and L. Huang (1970a). “Polynomial Psychophysics of Risk,” Journal of Mathematical Psychology, Vol. 7, pp. 317-338.

Conlisk, J. (1993). The utility of gambling. Journal of Risk and Uncertainty, 6, 255-275.

Francis, J., Eccles, M., Johnston, M., Walker, A., Grimshaw, J., Foy, R., Kaner, E., Smith, L., Bonetti, D. (2004). Constructing questionnaires based on the theory of planned behaviour. Newcastle, U.K.: Centre for Health Services Research University of Newcastle.

Garbarino, E. and M. Strahilevitz (2004). “Gender Differences in the Perceived Risk of Buying Online and the Effects of Receiving a Site Recommendation,” Journal of Business, Vol. 57, pp. 768-775.

Holt, C.A. and Laury, S.K. (2002). Risk aversion and incentive effects. American Economic Review, 92, 1644-1655.

Kaplan, L.B., Jacoby, J. and G.J. Syzbillo (1974). “Components of Perceived Risk in Product Purchase,” Journal of Applied Psychology, Vol. 59, pp. 287-291.

Kelsey, D. and Quiggin, J. (1992). Theories of choice under ignorance and uncertainty. Journal of Economic Surveys, 6., 133-153.

Lopes, L.L. (1995). “Algebra and Process in Modelling Risky Choice,” in Busemeyer, J.R., Hastie, R., Medin, D.L. (eds), Decision Making from a Cognitive Perspective. The Psychology of Learning and Motivation. Academic Press, Vol. 32, pp. 177-220.

Lupton, D. (1999). Risk. London and New York: Routledge.

Moore, E. and Eckel, C.C. (2003). “Measuring ambiguity aversion,” Working Paper, Blacksburg, Virginia: Virginia Tech.

Odean, T. (1998). Volume, volatility, price, and profit: when all traders are above average. Journal of Finance, 53, 6, 1887 – 1934.

Page, S. and A. Hewitt (2001). World Commodity Prices: Still a Problem for Developing Countries? Overseas Development Institute, London, UK.

Pratt, J.W. (1964). “Risk Aversion in the Small and in the Large,” Econometrica, Vol. 32, pp. 122-136.

Reinhart, C.M. and V.R. Reinhart (2001). “What Hurts Most? G-3 Exchange Rate or Interest Rate Volatility,” NBER Working Paper 8535, Cambridge, MA.

Schoemaker, P.J.H. (1990). Are risk preferences related across payoff domains and response modes? Management Science, 36, 1451-1463.

Schubert, R., Gysler, M., Brown, M. and Brachinger, H.W. (1999). ‘Financial decision-making: are women really more risk averse?’ American Economic Review Papers and Proceedings, 89, 381-385.

Schubert, R., Gysler, M., Brown, M. and Brachinger, H.W. (2000). Gender specific attitudes towards risk and ambiguity: an experimental investigation. Working Paper Nos. 00/17, Centre for Economic Research, Swiss Federal Institute of Technology Zurich.

Weber, E. U. (1998). Who’s afraid of a little risk? New evidence for general risk aversion. In J. Shanteau, B.A. Mellers, & D. Schum (Eds.), Decision Research from Bayesian Approaches to Normative Systems: Reflections on the Contributions of Ward Edwards (pp. 53-64). Norwell, MA: Kluwer.

Weber, E. U. (2001). Personality and risk taking. In N. J. Smelser & P. B. Baltes (Eds.) International encyclopedia of the social and behavioral sciences (pp. 11274-11276). Oxford, U.K.: Elsevier.

Weber, E.U., Blais, A.R. & Betz, E. (2002). A domain-specific risk-attitude scale: measuring risk perceptions and risk behaviors. Journal of Behavioral Decision Making, 15, 263 – 290.

Weinstein, N.D. (1980). Unrealistic optimism about future life events. Journal of Personality and Social Psychology, Vol. 39, pp. 806-820.