Reflection in Preferences Under Risk: Who and When May Suggest Why

In an experiment with 60 undergraduates, the robustness of the reflection effect was examined both within Ss and across Ss differing in risk style for a set of multi-outcome lotteries. Reflection was found to be weak and irregular for all choice pairs except those that included a lottery with a riskless component. The latter were generally preferred for gains but not for losses by both risk-averse and risk-seeking Ss. In all other choices, risk-averse and risk-seeking Ss differed systematically from one another, but in ways that are more complex than pure risk aversion or risk seeking would predict. It is concluded that the findings suggest a general inability of weighted value theories such as the prospect theory described by D. Kahneman and A. Tversky (1979) to adequately describe the pattern of risk preferences over individuals and over the full range of lottery types. Such inadequacy suggests the need for an alternative approach to risk with emphasis on the goals and strategies that individuals bring to the risky choice process