RELATIVE IMPORTANCE OF PROBABILITIES AND PAYOFFS IN RISK TAKING

Concerned with understanding how people make decisions about gambles when the relevant probabilities and payoffs are explicitly stated. It is proposed that decisions may be determined by a person's beliefs about the relative importance of probabilities and payoffs and by limitations on his ability to act on the basis of these beliefs when processing the information that describes a gamble. An explanation based on this information-processing orientation is offered as an alternative to present notions about probability and variance preferences. 2 experiments are reported to indicate the usefulness of considering gambling decisions within the context of information processing. (52 ref.) (PsycINFO Database Record (c) 2006 APA, all rights reserved). © 1968 American Psychological Association.