Understanding Risk Preference and Perception in Sequential Choice

The current research investigates consumer risk-taking in a dynamic setting--looking at choices made in a temporal sequence and for risks that cover several domains (financial, ethical, health/safety, social and recreational). Chapter 1 focuses on how risk-taking in this setting can lead to the use of categorization rules to determine behavior. The results demonstrate that individuals are more likely to take risks that are from the same category as risks they have already taken (compared to risks that are from different categories). Chapter 1 demonstrates that individuals are more likely to take risks when they are aggregated together, and categorization is one rule under which this aggregation can occur. While categorization leads to risk-seeking for risks from the same category, the more general question of why aggregation leads to greater risk-taking still remains. The extant literature on sequential risk-taking has not provided a clear mechanism for differences in risk-taking for prospects considered in a set versus prospects considered in isolation. There are two distinct theories--choice bracketing and construal level theory--that are both conceptually and empirically similar. Chapter 2 compares these two theories in order to disentangle their effects and see if there is any overlap between them.Taken together, this work expands our understanding of risk-taking over time and across domains. This can allow us to better predict and understand risk-taking behavior in a more realistic choice setting