Lecture 12

Question 1

Social amplification of risk

Answer 1

Context of risk influences perception - creator -> intermediary -> media -> social groups -> receiver. Each step can amplify or attenuate risk via source, vividness, etc.

Question 2

Individual differences in risk attitudes

Answer 2

Men take more risks, women perceive risks as higher. Teens more risk-seeking than older adults, experts tend to have different interpretations of risk. Each person’s personal risk perception is average across many realms

Question 3

DoSpeRT scale

Answer 3

Domain-Specific Risk Taking scale - factor analysis divides risks into financial, health/safety, social, ethical, recreational

Question 4

Risk perception vs. risk taking

Answer 4

Risk taking involves probability you will actually do a risky activity, whereas perception is just how risky the activity seems

Question 5

Temporal discounting

Answer 5

We discount future gains and losses - myopic tradeoffs between immediate and future costs and benefits

Question 6

Temporal gains vs. losses

Answer 6

We tend to want gains now and losses later

Question 7

Future v. present self

Answer 7

Future self seems like a different person. People who feel closer to future self discount less. People who are going to have a life changing event discount more b/c distance. Can manipulate this closeness to change results

Question 8

Can discounting be explained by rational reasons such as wanting to invest or needing the money?

Answer 8

If you add up all the rational reasons why money is less valuable when it’s delayed, we still discount more than you (or an economist) would expect.

Question 9

Indifference point

Answer 9

The value of the later option that would make

$ now and $ later equally attractive to you. Higher indifference point -> more discounting

Question 10

Discount rate

Answer 10

‘conversion rate’ between $ now and $ later

– higher discount rates -> more discounting

Question 11

Discount factor

Answer 11

Inverse of discount rate. Lower factors -> more discounting

Question 12

Exponential discounting

Answer 12

Discounting more during first stages - if we have to wait anyways, we are willing to wait a little longer - more patient when there is no immediate option

Question 13

Temporal myopia

Answer 13

Overweight presence: difference between now and later is bigger than the difference between later and even later

Question 14

Exponential vs. hyperbolic discounting

Answer 14

Two mathematical models of discounting. Hyperbolic is a steeper downwards curve

Question 15

Framing and discounting

Answer 15

is the present the default, or the future the default?