Evaluating risk propensity using an objective instrument

Area of Science:

• Psychology
• Behavioral Economics

Background:

• Risk propensity evaluation methods include self-report questionnaires and objective tests.
• Self-report measures suffer from biases and lack predictive value.
• Objective tests are resource-intensive for large-scale administration.

Purpose of the Study:

• To develop and validate an easy-to-administer, 30-item objective test for measuring risk propensity.
• To assess the psychometric properties of the new risk propensity questionnaire.

Main Methods:

• A 30-item objective test was developed, with each item presenting a choice between three options of equivalent expected value but different gain functions.
• The questionnaire was administered to 222 subjects.
• Reliability testing and exploratory factor analysis were conducted.

Main Results:

• Exploratory factor analysis supported a three-factor model of risk: Sports and Gambling, Long-term Plans, and Loss Management.
• Confirmatory factor analysis, after adjustments and inclusion of a global risk propensity factor, demonstrated adequate goodness of fit.

Conclusions:

• The developed 30-item test is a psychometrically sound and efficient tool for assessing risk propensity.
• The findings support a multi-factorial structure of risk propensity, including distinct dimensions related to sports/gambling, long-term planning, and loss management.