Attribute tradeoffs in low probability/high consequence risks: the joint effects of dimension preference and vagueness

Abstract

AbstractA number of studies have shownthat people are typically averse to vagueness inprobabilities. But formanyimportant decisions, peoplerarely have access to precisevalues for either outcomes or probabilities. It has been demonstrated that mostpeople held congruent attitudes towards vagueness for both probabilities andoutcomes, but dimension preference was typically a better determinant of choicethan vagueness attitudes. The present study investigates vagueness effects on therelative weighting ofrisk dimensions for a particularly problematic type of hazard-risks with very small probabilities and severe consequences - using a morereliableand robust measurement procedure. Eighty-seven subjects evaluated hypotheticalhealth risk options whichvaried interms ofthe probability of loss, amountof loss,and the precision with which each dimension was specified. Relevant individualattitudes towardsvagueness and dimensionpreferenceweresignificant predictorsofchoice, and a new indication of an association between dimension salience andvagueness attitude was found: most subjects were more concerned with loss thanprobabilities, and were moreaverse to vagueness in losses as well.1. IntroductionA number of empirical studies (e.g., Ellsberg,