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Impact of regulatory focus on ambiguity aversion
Author(s) -
Liu HsinHsien
Publication year - 2011
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.702
Subject(s) - regulatory focus theory , ambiguity aversion , ambiguity , preference , risk aversion (psychology) , promotion (chess) , loss aversion , psychology , economics , stock (firearms) , social psychology , actuarial science , expected utility hypothesis , microeconomics , financial economics , computer science , political science , mechanical engineering , politics , creativity , law , programming language , engineering
Although prior research has shown that some people prefer a risky to an ambiguous option, this study further proposes that people's regulatory focus (promotion vs. prevention) might influence their ambiguity aversion. Three experiments have tested whether people with promotion focus showed less ambiguity aversion than those with prevention focus: The first experiment revealed that, compared with chronically promotion‐focused individuals, prevention‐focused subjects preferred a risky to an ambiguous option. In the second experiment, priming of the subjects' goal orientations led to similar results. Experiment 3 demonstrated that participants showed less ambiguity aversion for the expected performance of an investment product representative of promotion (e.g., a stock fund) rather than one representative of prevention (e.g., a bond fund). In other words, people showed less preference for a bond fund when the probability distribution of its expected performance was unknown than when it was known, whereas they showed less preference difference between known and unknown probability distributions for the expected performance of a stock fund. This study has integrated research pertaining to regulatory focus and ambiguity aversion, and the results have confirmed that the impact of regulatory focus on ambiguity aversion is robust across different methods and decision tasks. Copyright © 2010 John Wiley & Sons, Ltd.