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Risk perception and risk management : a review. Pt. 1, Risk perception

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Abstract

While experts confine the tenn risk to a combination of magnitude and probability of adverse effects, lay persons associate with risk a variety of criteria, such as voluntariness, possibility of personal control, familiarity, and others. To improve our knowledge about the risk perception process is crucial for improving risk management and risk communication. Responsive and rational approaches to risk management should recognize the results of risk perception studies in two ways: First, management has to address the concerns of the affected public and find policy options that reflect these concerns ; second, risk reduction or mitiga-tion should be tailored towards the goal of meeting not only the risk minimization objective, but also the implicit criteria of risk characteristics that matter to the public. If these criteria are in conflict with each other, tradeoffs have to be made and justified through legitimate instruments of conflict resolution. Risk perception studies can help to identify public concerns and shape the arena for conflict resolution. In addition, risk perception studies offer valuable insights for designing and implementing risk communication programs.
RISK PERCEPTION
AND
RISK MANAGEMENT: A REVIEW
Part
1:
Risk Perception
OrtwinRenn
Center for En\'ironment, Technology,
and
De-
velopment, Clark University, Worcester, MA,
01610, USA.
Abstract: While experts confine the tenn
risk to a combination of magnitude
and probability of adverse effects, lay
persons associate with risk a variety of
criteria, such as voluntariness, possi-
bility of personal control, familiarity,
and others. To improve
our
knowledge
about the risk perception process is
crucial for improving risk management
and risk communication. Responsive
and rational approaches to risk man-
agement should recognize the results
of risk perception studies in
two
ways:
First, management has to address the
concerns of the affected public and find
policy options
that
reflect these con-
cerns; second, risk reduction
or
mitiga-
tion should
be
tailored towards the
goal of meeting not only
the
risk mini-
mization objective,
but
also the im-
plicit criteria of risk characteristics that
matter to the public.
If
these criteria are
in conflict
with
each other, tradeoffs
have to
be
made
and
justified through
legitimate instruments of conflict resol-
ution. Risk perception studies can help
to identify public concerns and shape
the arena for conflict resolution.
In
addition, risk perception studies offer
valuable insights for designing and
implementing risk communication
programs.
INTRODUCI'ION
Since the 1950s psychologists
have investigated the intuitive mecha-
nisms of people to collect, assimilate,
and evaluate information about activi-
ties
or
technologies with uncertain
outcomes (Edwards
1954;
Coombs
and
Pruitt
1960;
Slovic et al. 1979; Slovic
1987; a review in Covello 1983 and
Renn
1986).
The major objective of these
studies
has
been to explain the psycho-
logical relevance of probabilistic infor-
mation for the formation
and
change of
attitudes
and
corresponding behavior.
The interest in public perception was
fueled by the observation of an often
pronounced difference between. the
views of decision makers and sections
of the public regarding the seriousness
of certain risks and the desired balance
between risks and benefits for certain
hazards (Otway and von Winterfeldt
1982).
The
tenn
"risk perception" can
easily lead to the impression that the
public has a common and all.-encom-
passing rationale for
~sessmg
and
evaluating risks.
In
reahty, however,
people perceive technologies or events
and
not an abstract concept such as
risk. In addition, the components of
risk perception depend
?n
th~
type of
risk source
under
consideratIon and
2
differ between various segments of the
population. It is
thus
misleading to use
the
term risk perception for describing
a single public response to risk sources.
Rather risk perception denotes a vari-
ety of concepts
and
mechanisms to pro-
cess probabilistic information depend-
ing
on
the risk context
and
the
individ-
ual (Renn 1985
and
1989).
In
some
contexts, risk refers to the thrill and
excitement of undertaking a difficult
challenge, such as mountain climbing
or
rescuing a person from a
burning
house. In another context, risk is per-
ceived as a chance to achieve a possible
goal, such as investing in the stock
market
or
participating in a lottery.
Large scale technologies,
on
the
other
side, evoke associations
of
continual
pending danger. Risks posed
by
these
technologies generate considerable
public attention
and
anxiety because
the observer has the impression that
the catastrophic event can occur
at
any
time and leaves little time for protec-
tive actions.
The
probability of such
an
event is usually not considered as a
factor in evaluating
the
seriousness of
such a risk,
but
it is rather the per-
ceived randomness of occurrence and
the time
span
between
the
accidental
release and the resulting health effects
that most people use as yardsticks to
delineate judgments about the riski-
ness of a technology
or
activity.
In
addition to social context,
risks are also perceived differently de-
pending
on
the social position, the
cultural beliefs,
or
values of the indi-
vidual
or
group
involved (Douglas and
Wildavsky
1982;
Vlek and Stallen
1981).
Surveys have clearly demonstrated that
persons
who
feel closely attached to
the
values
of
economic performance
and
standard
of living, perceive tech-
nological risks as less threatening
than
persons
who
have
developed a special
sensitivity towards environmental
protection
and
equity issues (Bisconti
1989; Rayner
and
Cantor 1987).
The
more
people
depend
economically on
the
production sector of society the
more
they feel that risk-taking is
an
inevitable
and
ultimately
rewarding
activity for individuals
and
society.
In
spite of these differences in
understanding
and
processing risk,
many
studies
have
shown
surprising
similarities in the fundamental mecha-
nisms that most people employ to as-
sess the potential risk
of
an
activity
or
technology
and
to
justify their concern
or
neglect
of
such risks (Slovic
et
al.
1979; Gould et al. 1988; Covello 1983).
The following briefly describes such
fundamental processes of risk percep-
tion which seem to underlie the intui-
tive assimilation of probabilistic in-
formation for large segments of society
and surprisingly enough across national
and
cultural borders.
INSIGHTS
FROM
RISK
PERCEPTION
STUDIES
The
Determinants
of
Risk
Perception
Starting with the pioneering
work
by Decision Research in Eugene,
Oregon, (Fisch hoff et al. 1978; Slovic
1987)
psychometric methods have been
employed to explore the characteris-
tics of risk that influence the intuitive
judgment of seriousness of risk
and
its
acceptability. The following aspects of
risk have been found to affect the per-
ceived riskiness
of
objects
or
activities:
Expected
number
of
fatalities
or
loss-
es. Although
the
perceived average
number
of
fatalities correlates with the
perceived riskiness
of
a technology
or
activity, the relationship is weak
and
generally explains less than 20 percent
of
the variance (Renn and Swaton
1984).
The major disagreement between teclmi-
cal risk analysis
and
risk perception is
not
on
the
number
of
affected persons,
but
on
the importance
of
this infor-
mation for judging
the
seriousness of
risk. In several risk perception studies,
many respondents expressed fairly
accurate predictions
on
the estimated
average losses of life
and
limb over
time for different risk sources (Slovic et
al
1980;
Renn 1984).
High
risks
were
usually underestimated
and
low risks
overestimated,
but
the overall corre-
spondence between calculated and
per-
ceived risks was much better than many
risk experts
had
expected (Lichtenstein
et
al.
1978). In contrast to the expert
community, however,
the
respondents
did not base their evaluation of riski-
ness
on
the prediction of fatalities,
but
relied more heavily
on
so-called quali-
tative characteristics, such as dread of
potential consequences
or
perceived
quality
of
institutional control. Com-
munication programs that are geared
toward informing the public about the
probabilities of rare events are there-
fore only of limited value, since the
perception
of
riskiness is a function of
many different factors of which the
results of technical risk assessments is
only
one
among others (Jungermann
1982).
Catastrophic potential. Most people
show distinctive preferences among risk
choices
with
identical expected values,
but
variations in the range of outcomes
over
time (Slovic et al.
1979;
Covello
1983; Royal Society 1983). Low-proba-
bility high-consequence risks are usu-
ally perceived as more threatening than
more probable risks
with
low
or
me-
dium
consequences.
If
people fear that
a major disaster may result from a
failure of a technology
and
if such a
failure is not intuitively understood
or
imaginable as a low probability event,
the perceived catastrophic potential im-
pacts then
on
the perceived serious-
ness of such a risk (von Winterfeldt et
al.
1981).
For example, coal-fired power
plants are usually perceived as less
risky
than
nuclear
power
plants since
the catastrophic potential of nuclear
energy is seen as more dramatic and
far-reaching than that of coal energy.
Neither the acid rain problem
nor
the
threat of the greenhouse effect have
significantly changed that perception
(WEC
1989).
Circumstances of the
risk
(qualitative
characteristics). Surveys and experi-
ments revealed that perception of risks
is
influenced by a series of perceived
properties of the risk
or
the risk situ-
ation (Fischhoff et al. 1986; Slovic
et
al.
1982; Renn and Swaton 1984). Among
the most influential factors are: dread;
personal control; familiarity with risk;
the perception of equitable sharing of
both benefits and risks;
and
potential
for blame (possibility to make a person
or
institution responsible for the crea-
tion of a risky situation). A more com-
prehensive list of qualitative risk
fac-
tors is shown in Table
1.
3
4
Table
1:
Summary
of
Risk Perception
Studies.
Risk Perception is a function of:
1. intuitive heuristics,
such
as
availa-
bility, anchoring, overconfidence,
and
others
2. perceived
average
losses
over
time
3.
situational characteristics
of
the
risk
or
the
consequences
of
the
risk
event
4. associations
with
the
risk
source
5. credibility
and
trust
in
risk-handling
institutions
and
agencies
6.
media
coverage (social amplification
of
risk-related information)
7.
judgment of others (reference groups)
8. personal experiences
with
risk
(familiarity)
Risk Perception is influenced by:
a) voluntariness
b) controllability
c)
catastrophic potential
d)
delay
of
consequences
e) tendency
to
kill
rather
than
to injure
f)
perceived
threat
to
future
generations
g) equal
exposure
to
risk
h)
equal
risk-benefit distribution
i)
familiarity
with
risk
j)
perception
of
benefits
k) exclusiveness
of
benefits
The
degree
to
which
risk in-
vokes a feeling
of
dread
and
unavoida-
bility
is
strongly correlated
with
per-
ceived riskiness (Krewski et al. 1987).
With respect to different energy sys-
tems, nuclear
energy
is associated
with
manynegattvequalitativefactors, such
as
dread,
inequitable
risk-benefit dis-
tribution,
and
unfamiliarity;
whereas
decentralized solar
energy
mobilizes
mostly
positive
associations,
such
as
subject
to
personal
control,
low
cata-
strophic
potential,
and
equitable
dis-
tribution
of
risks
and
benefits. So
it
is
not
surprising
that
most
studies
on
public perceptions reveal a positive risk
perception
pattern
for
solar
energy
versus
a
more
negative for
nuclear
energy
(Gould
et
al. 1988; Renn 1984;
Otway
1980).
Beliefs
associated
with
the
cause
of
risk.
The
perception
of
risk is often
part
of
an
attitude
that
a
person
holds
about
the
cause
of
the
risk, i.e. a tech-
nology,
human
activity,
or
natural event
(Otway
1980).
Attitudes
encompass
a
series
of
beliefs
about
the
nature,
con-
sequences, history,
and
justifiability of
a
risk
cause.
Due
to
the
tendency
to
avoid
cognitive
dissonance
among
beliefs,
most
people
are
inclined
to
per-
ceive risks
as
more
serious
and
threat-
ening
if
the
other
beliefs contain nega-
tive
connotations
and
vice versa. A
person, for example,
who
believes
the
use
of
pesticides is
linked
to
profit-
seeking
behavior
of agro-industrial
corporations
is
more
likely to
think
that
the
concomitan t risks
are
high
than
a persons
who
associates pesticides with
the
global
struggle
of
societies
to
fight
hunger
and
malnutrition. RIsk estimates
are
therefore constantly
ad
justed
to
the
overall
judgment
of
the
desirability
of
the
technology
in
question.
Credibility
of
the
risk
management
institutions.
Many
risks
are
taken
by
society
without
consent
of
each indi-
vidual
affected
and
his
or
her
possibil-
ity to mitigate
the
risk
through
per-
sonal actions. Those collective risks
are
only accepted
if
the affected population
is
confident
that
the
lack
of
individual
control is
compensated
by
institutional
control (Gould
et
al. 1988; Vlek
and
Stallen 1981). Confidence
in
risk man-
agement institutions relies on perceived
competence
and
trustworthiness (Renn
and Levine 1988).
The
public expects
these institutions
to
have
the
expertise
to monitor
and
control
the
risk
and
to
be impartial
and
independent
in their
judgments
and
actions. Attitudes to-
wards nuclear energy in
the
United
States, for example,
are
closely corre-
lated with the assignment of credibility
to the Nuclear Regulatory Commis-
sion (Freudenburg
and
Baxter 1985).
The credibility of
an
institution
is
largely
determined
by
two
factors:
the
per-
ception
of
past performance (compe-
tence)
and
the perception
of
openness
and
flexibility to incorporate
and
proc-
ess
new
infonnation
and
public de-
mand (responsive
and
honest interac-
tion with society).
In
addition, the public
expects institutions
to
be
fair in dis-
tributing protective services
and
to
accept
the
concept
of
checks
and
bal-
ances (Renn
and
Levine 1988).
Distribution
of
risks
and
benefits
among
the
affected
population.
Eq-
uity issues play a major role in risk
perception. The
more
risks are seen as
unfair to
the
exposed population, the
more they
are
judged
as
severe
and
unacceptable (Kasperson 1987; Royal
Society 1983).
It
should
be
noted that
the estimation of severity
and
the judg-
ment
about
acceptability
are
closely
related in risk perception. The analyti-
cal separation in risk estimation, evalu-
ation,
and
management, as exercised
by most technical risk experts, is not
paralleled in public perception. Most
people integrate information about the
magnitude
of
the risk,
the
fairness
of
the
risk situation,
and
other qualitative
factors into their holistic judgment about
the
(perceived) seriousness
of
the re-
spective risk. They take equity issues
into consideration
and
evaluate
the
magnitude
of the risk in terms of equal
distribution of risks
and
benefits. This
concern for equity has often been la-
belled as the NIMBY (Not
In
My Back
Yard) syndrome. Although evidence
suggests that many people express
inconsistent preferences
when
it comes
to nearby
or
remotely sited facilities,
most studies show, however, that
the
underlying argument is not so
much
to
avoid a risk for oneself
and
impose it
on
others (as the NIMBY
syndrome
would
suggest),
but
to avoid situations
in
which risks are imposed
on
one
part
of
the population while
another
part
enjoys the benefits (Marks
and
von
Winterfeldt
1984)
.
This list of factors demonstrates
that public understanding of risk is a
multi-dimensional concept and cannot
be reduced to
the
product of probabili-
ties
and
consequences. Although risk
perceptions differ considerably among
social
and
cultural groups, the multi-
dimensionality of risk, the importance
of
qualitative risk factors,
and
the inte-
gration of beliefs (associated with the
risk itself, the cause of the risk.
and
its
circumstances) into a consistent belief
system
appear
to
be
common charac-
teristics of public risk perception among
all segments of the population
and
among
different cultures. Risk percep-
tion studies have been conducted in
most western European countries, the
USA, Canada, Australia
and
some
5
6
eastern
and
developing countries (d.
the citations
in
Covello 1983; Borcher-
ding
et
al. 1986; Renn 1984
and
1989).
All of these studies conclude
that
simi-
lar mechanisms
are
involved,
but
that
these mechanisms can
be
compensated,
attenuated
or
amplified by specific so-
cial, cultural,
or
political factors. From
the
perspective
of
an
individual,
the
cultural environment co-detennines the
degree of confidence in one's own judg-
ment of probabilities
and
riskiness
(Wright
and
Phillips 1980); from the
societal perspective, organizational and
social preferences for risky choices can
be penalized
or
awarded
by
cultural
stimuli (Hofstede
1980).
In spite of these
cultural
and
social differences, risk
perception seems to
be
characterized
by
a series of apparently universal fac-
tors that represent
common
sense
mechanisms for coping with uncertainty
(Renn 1989).
PERCEPTION
AND
PROCESSING
OF PROBABILITIES
In addition to the c:ircwr6tances
and
qualitative aspects of risks, the
meaning
and
understanding
of
proba-
bilities have been the subject of numer-
ous studies (Kahneman
and
Tversky
1974;
Slovic et al.
1979;
Vlek
and
Stallen
1981). Apparently, common sense rea-
soning
is
governed by a categorical
and
deterministic model: either some-
thing
is
safe
or
unsafe, healthy or un-
healthy, acceptable
or
unacceptable.
Such a dichotomous approach obvi-
ously simplifies the complexity involved
in stochastic events,
but
it provides a
sufficiently accurate mechanism to guide
one's
own
action in everyday life with-
out imposing excessive time require-
ments
for routine decisions.
The
de-
terministic approach to decision mak-
ing
conflicts, however, with the neces-
sity to set
an
acceptable risk level for all
stochastic risks (risks
without
thresh-
old
of no effect).
The
question
"How
safe is safe
enough?"
poses an abstract
choice situation which transcends
common experience
of
most people.
This is
one
of
the reasons
why
stan-
dards
for stochastic risk reduction are
so
much
in
the focus of public contro-
versy
about
risk management.
Since most people are
unfamil-
iar
with
stochastic reasoning, they
use
a variety of simplified cues
or
heuris-
tics
to
judge the probability of
an
event
or
activity. Among these heuristics are
(Kahneman
and
Tversky 1974; Slovic
et
al. 1979; Renn
1988):
Availability: Events that come
to
people's mind immediately are rated
as
more
probable
than
events that are
less mentally available. For example,
most people can recall at least
one
or
two
major nuclear accidents (such as
Chernobyl
or
TMl),
but
do
not recall
any
dam
failure although statistically
many more fatalities have been recorded
as a result
of
dam
failures than of nu-
clear accidents.
Anchoring effect: Probabilities are ad-
justed to the information available or
the perceived significance of the infor-
mation. The easier it is to imagine a
disaster
or
another adverse effect
the
more likely people perceive such
an
outcome to occur.
If
people can smell
or
visually detect a pollutant, the more
they feel that such a pollutant
is
likely
to affect their health. Symbolic cues,
such as warning labels
or
monotonous
high pitched music (often
used
to illus-
trate the
danger
of radiation) can serve
as substitutes for concrete anchors and
often amplify
the
perception that dan-
ger is eminent.
Representativeness: Singular events
ex-
perienced in person
or
associated with
properties of an event are regarded as
more typical
than
information based
on frequencies. Someone
who
experi-
enced an unlikely event, such as witne-
ssing a person struck
by
lightning, tends
to overestimate the likelihood of such
an event. Redundant information stem-
ming from an identical source is usu-
ally perceived as more reliable than
singular,
non-redundant
information.
In
each of these cases, inferences are
made on the basis of limited
or
biased
observations. A mere list of all unusual
events in a chemical factory promotes
the impression that technical failures
are more common there than in other
factory types where occupational
safety
is
less monitored and reported to the
public.
Avoidance of cognitive dissonance:
Information that challenges perceived
probabilities that are already part of a
belief system will either
be
ignored
or
downplayed. Persons who already hold
negative attitudes toward a technol-
ogy or an activity are likely to oppress
all
information that challenges their
prior attitude
and
seeks information
that reinforces their initial position. The
avoidance of cognitive dissonance is a
powerful filter for selecting and reject-
ing information and
one
of the reasons
that public information
or
communica-
tion campaigns often have only very
limited effect on attitude change (Renn
and
Levine
1988).
Because probabilities are vital
components of risk perception, risk
managers must account for the intui-
tive preference for deterministic rea-
soning
and
the overt biases of pro-
cessing probabilistic information. Fur-
thermore, the terms used in framing
probabilities, for example chance of
lives lost versus lives saved,
or
the
probability of dying versus survival,
lead to different reactions by the re-
ceivers (Dawes
1988).
Risk perception
studies are therefore vital instruments
for designing risk management pol-
icies and risk communication programs.
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9
... Some research has revealed that various factors such as demographic, social, and cultural factors influenced risk perception [19][20][21]. Other researchers found that voluntariness, personal ability to influence risks, familiarity with the hazard, and catastrophic potential provided useful information to consider in constructing their interpretation of risks [22][23][24]. However, these psychological explanations cannot explain why people perceive some risks, but ignore others. ...
... The sociological analysis provided some further social insights. Some studies explored coping strategies from the perspective of organization and management [22,23], while others explored the formation and changes of people's attitudes towards risk-bearing activities [25,26]. More theoretically, some researchers emphasized the social construction of risk interpretations and their relationship to knowledge acquisition, social interests, and cultural values [25][26][27]. ...
... Kasperson et al. proposed the social amplification of risk model (SARM) to explain how the risk is amplified from the individual to the society, they pointed out that events related to the hazards of the interaction of psychological, social, institutional, and cultural processes might heighten or attenuate personal and social perceptions of risk, and shape risky behaviors. Behavior, in turn, could produce secondary social or economic consequences that go far beyond direct harm to humans or the environment, including major indirect effects, such as liability, insurance costs, loss of trust in institutions, or alienation from community affairs [22,28]. ...
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Previous research has revealed that environmental, social, and cultural factors affect people’s risk perception of COVID-19, especially the influence of media and trust, while the dynamics of how they affect it is still not clear. Through the analysis of online survey data, this article shows that there are two opposed paths of action. Trust in the government will enhance people’s confidence in controlling COVID-19. It then moderates and decreases the effects of people’s level and frequency of concernon the risk perception (both cognition and worries) of COVID-19, on the contrary, obtaining information from unofficial channels also moderates and increases the effects of the people’s level and frequency of concern on the second dimension (worries) of risk perception of COVID-19 rather than the first dimension (cognition). These conclusions have important policy implications for the control of the COVID-19 epidemic all over the world.
... Risk perception and communication factors have been addressed since risk management became a field of study (Renn, 1990;Coombs & Holladay, 2010). Based on that, high-risk industries have been exchanging insights about multiple risk-related factors, informing the knowledge base for safety and accident investigation methods and safety investigators (Angulo, et al., 2009;Yanting & Liyun, 2011). ...
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Although effective risk management is highly dependent on risk perception and communication, limited attention has been given to the influence and consideration of these two constructs and their factors in the aviation industry. This research aimed to map practices and perspectives of safety investigators regarding risk perception and communication in aviation and reveal respective influential parameters. The interviews with ten experienced safety investigators revealed that they consider and search risk perception and communication factors but with a divergent emphasis. Investigators acknowledged the effects of emotional and cognitive biases as well as the role of context when examining risk perception and communication factors and attributed the shaping of the latter to organisational practices, mainly training, supervisory and cultural aspects. Overall, the findings of this study suggest investigation methods could be enriched with a systematic approach to examining the role of risk perception and communication and considering their shaping factors while also providing directions for abating subjectivity when addressing these two constructs. This could be facilitated by developing a common reference framework for risk perception and communication and be accompanied by support from specialists and training in the management of investigators’ heuristics.
... (2) The exploitation of intuitive heuristics, the perceived characteristics of risk, the risk situation, and affective associations in the development of individual, and social risk perception of technologies [37], [34]. (3) The influence of semantic images (emerging danger, insidious danger, stroke of fate, gamble, personal thrill) [38] helps individuals to classify risk thus reducing complexity [34]. (4) Psychometric variables account for a considerable proportion of variance in risk perception e.g. ...
... These images are discrete manifestations of specific key risk characteristics and allow individuals to perceive different risks based on few salient features (Martin & Peppoloni, 2017). Renn (1990Renn ( , 2008a has suggested five semantic images that serve individuals as useful tools for responding to risk situations. The semantic images create classes of similar phenomena in order to simplify excess information, resolve ambiguities, and/or step in if information is lacking (Howard, 2013). ...
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... Perceived risk is a person's opinion (viewpoint) of the likelihood of risk (the potential of exposure to loss, danger or harm) associated with engaging in a specific activity. Renn (1990) provided a key summary of findings in which perceived risk is a function of the following: ...
Preprint
A significant topic within the behavioral finance literature is the notion of perceived risk pertaining to novice investors (i.e. individuals, finance students) and investment professionals (i.e. financial planners, security analysts). The author provides an overview of the concepts of risk, perception, and risk perception with the financial scholar in mind. There is also a presentation on the behavioral finance concepts and themes that might influence an individual's perception of risk for different types of financial services and investment products. The next section presents a discussion of the significant risk perception research in the social sciences namely from psychology. This research work from psychology (i.e., risk perception studies in risky situations and hazardous activities) is the behavioral foundation for a substantial amount of the current contributions within the behavioral accounting and behavioral finance literature. In particular, the work of the Decision Research scholars including Paul Slovic and his co-authors on risk perception studies that have crossed over from psychology to the disciplines of behavioral accounting and behavioral finance (i.e. behavioral risk characteristics from psychology that are applied within a financial/investment decision making context). Within the last section of this paper, the author reveals the first of its kind thorough review of the academic research studies on perceived risk/risk perception from the disciplines of behavioral accounting since 1975 and behavioral finance since the late 1960s. This literature review incorporates 12 works from behavioral accounting and 71 endeavors from behavioral finance. In addition, the behavioral finance literature review section also includes approximately 10 narrative research reviews from risk perception studies in behavioral economics. A major facet of this paper was to bring together all the previous studies in the risk perception literature for the purpose of conducting a study based on the academic foundation of the main themes, research approaches, and findings from this collection of studies. Keywords: risk perception, perceived risk, risk analysis, behavioral risk characteristics, objective risk, subjective risk, behavioral accounting, behavioral economics, standard finance, behavioural finance, psychology, financial psychology, social sciences, risk, standard deviation, beta, Fama, French Ricciardi, Victor, A Risk Perception Primer: A Narrative Research Review of the Risk Perception Literature in Behavioral Accounting and Behavioral Finance (July 20, 2004). Available at SSRN: https://ssrn.com/abstract=566802
... When it comes to innovation, as NBS might be, capturing the perception of the possible risks that might influence the acceptance or rejection of a NBS measure is key if we want to avoid high transactions costs. Risk perception plays an important role when reacting to hazards (Renn, 1990), and can be influential in determining how people choose to mitigate the risk of those hazards (Martin et al., 2009). However, perceived risk does not always correspond with scientific analysis views (Science Communication Unit, 2014), because risk perception is a combination of social, cultural, political and emotional factors as well as of innate influences (Renn and Rohrmann, 2000). ...
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Safety risk perception is an important determinant of risk-taking behavior in construction. The amount of risk-taking an individual chooses to take with respect to safety influences the overall safety outcome of an activity. Risk perception can be influenced by a shared culture, where previous studies contend that individuals working for the same company share similar norms and values with respect to safety. As such, cognate perceptions of risk associated with a certain situation among employees is expected. However, this theory has yet to be tested and evaluated in construction. The objective of the present study is to evaluate social theories of risk perception by cross-examining field workers and their management personnel in four different aspects of risk in construction (pending danger, slow killer, cost-benefit ratio, and avocational thrill). To collect the necessary data for the study, in-person interviews were carried out across multiple construction sites with over 30 workers and construction managers along with an on-line survey of workers. Statistical and graphical analyses were used to examine the connection between types of safety risk and cultural perspectives. The study findings indicate that sharing a similar risk perception between field workers and their direct managing personnel depends on the type of risk in question. Workers within the same construction site who were found to have similar views on risk as a slow killer have contradicting views on pending danger risk. The present study provides empirical evidence that individuals working for the same company may not necessarily share similar safety norms and values especially if they occupy different positions.
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Suggests an alternative to the maximization of expected utility model. Using college Ss, a "study was carried out on bets which were constant in expectation but which varied in skewness or variance with the other variable held constant. Replicated pair comparisons permitted measurement of inconsistency of choice behavior, testing stochastic transitivity, construction of the stochastically dominant preference ordering, and an unfolding analysis of these preference orderings." (PsycINFO Database Record (c) 2012 APA, all rights reserved)