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Centre for Risk Research

Study shows how experience and cultural background can influence risky decisions

Published: 14 May 2014

A new Centre for Risk Research study has revealed how an interaction between experience, cultural background and the way that risk-information is presented can influence risk-related decisions.

Study explored gambling decisions

It has been well established that the way risk information is presented can affect the way that risks are perceived. Based on these findings it might be assumed that those interested in communicating risk (e.g., doctors, social-workers, risk-managers, politicians, advertisers, etc.) should choose the risk information format that portrays the risk in their preferred way. However, a new study conducted by Dr Peter Fraser-McKenzie, Professor Ming-Chien Sung and Professor Johnnie Johnson warns that the choice of format used to present risk information must be made very carefully as it appears that these risk information format variations do not influence everyone in the same way. The study, which has been published in the journal Risk Analysis under the title "Toward an Understanding of the Influence of Cultural Background and Domain Experience on the Effects of Risk-Pricing Formats on Risk Perception", revealed that the cultural background and domain experience of the perceiver appears to interact with the risk-pricing format variations; subsequently, this biased risk perceptions in different ways.

Risk-data comes in many formats

The study revealed that when betting on the same hypothetical horse races, under the odds format (e.g. 2/1, 5/4, etc.) participants that were higher in gambling experience tended to take more risks and Asian (vs. European) participants tended to be more risk averse. Under a probabilities format (e.g. 0.333, 0.444, etc.), Europeans tended to take more risks on average than Asians, but that gambling experience appeared to make little difference to the biasing effect of this format. Under a decimal returns format (e.g. £3.00, $2.25, etc.), the pattern changed again; this time with no difference between Asian and European participants in risk taking at all, only that higher experienced participants took more risks.

These findings suggest that more caution is needed in assuming that a certain risk information format will have a specific effect on a particular audience without first taking into account cultural and experience characteristics of that audience. Moreover, the study also has some profound implications for some well-established cross-cultural differences in risk-taking behaviour. It has been frequently observed in experimental studies that Asian decision-makers tend to take more risks on average than Western decision-makers. However, could these effects be simply an artefact of the risk-information format used in these studies? As Dr Peter Fraser-Mackenzie, who led the study, points out; "when we averaged across all three risk-information formats, we observed no significant difference between Asians and Europeans in their degree of risk-taking". This could suggest that the differences between cultures are not due to differences in their attitudes to risk at all, but rather due to differences in how each culture encodes and perceives risk information.

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