Studying risk taking behaviour: a field experiment
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Risk taking behavior was studied in a field experiment, where, unlike experiments in laboratory settings, subjects had to make real decisions, gain or loose real stakes. In real situations, not only the few factors chosen by the researcher influence risk taking behavior, but also a number of interdependent constituent effects. This research investigated the impact of the positive or negative framing, the available resources, the aspiration levels, and the risk taking propensity of the individual in a real situation. A second experiment was run in a laboratory to control for the difference in the two approaches. It was found that people take much smaller risk in real situations where they have to face real consequences. In real situations, when subjects get close to the survival point, they do not engage in extreme risk taking strategies, such as complete avoidance or extreme risk taking. This result contradicts the findings of research undertaken in laboratory settings. In this study the amount of the previously accumulated resources seems to be the most important determinant of risk taking behavior. Subjects with limited resources perceived the situation as riskier, experienced more serious uncertainty, and lowered their aspiration level. Our results contradicted the prediction of prospect theory which indicates risk avoidance in a positively framed (gaining), and risk avoidance in a negatively framed (loosing) situation. Our subjects radically reduced their willingness to take risks in the negative frame both in the real and the hypothetical situations.
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