The Relationship Between the Perceived Risk and Attractiveness of Gambles: A Multidimensional Analysis

Abstract

Judgments of perceived risk and attractiveness for a set of 50 two-outcome gambles were obtained from 39 college students. The data were used to test various ordinal properties of the gambles implied by Pollatsek and Tversky's theory of risk and Coombs' Portfolio theory. In addition, the MDPREF multidimensional scaling procedure was used (1) to test the assumption that gambles are perceived and evaluated as multidimensional stimu li; (2) to determine the characteristics of gambles affecting perceived risk and attractiveness; (3) to as sess the extent of individual differences in percep tion of gambles; and (4) to test the implication of Portfolio theory that attractiveness is a function of perceived risk and expected value. The results sup ported the multidimensional nature of gambles and the implications of Portfolio theory. In the MDPREF analyses large individual differences were found in perceived risk and attractiveness of gam bles. Potential uses of multidimensional scaling techniques in further research on individual dif ferences in gambling behavior are proposed and discussed.

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