Effects of Risk and Ambiguity on Behavioral Choice and Resource Allocation Decisions
Sawyer, John Edward
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https://hdl.handle.net/2142/69708
Description
Title
Effects of Risk and Ambiguity on Behavioral Choice and Resource Allocation Decisions
Author(s)
Sawyer, John Edward
Issue Date
1987
Department of Study
Psychology
Discipline
Psychology
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Psychology, Industrial
Abstract
Decision researchers have consistently found that uncertainty has separate effects on judgments and choices. Decision theorists typically focus on binary choice alternatives. However, many decision problems involve determining optimal allocations of resources across continuously distributed competing demands. Scholars of organizational behavior have suggested that individuals form a perception of the form of the contingency functions that relate acts to outcomes. They assume that individuals then behave with respect to those perceived contingency functions, without regard to uncertainty related to those contingencies.
This thesis applies decision theory notions about the effects of risk and ambiguity to the study of the judgments of continuous act to product contingencies and allocation decisions. Two-hundred and fifty subjects learned and made judgments about two act to outcome contingencies under two levels of risk and three levels of ambiguity. They then made resource allocations to acts for which they had judged the contingencies.
The results clearly indicate that uncertainty has separate and distinct effects on judgments and resource allocation decisions. Specifically, contingency functions learned under certain conditions were perceived as being far more linear than the actual function forms. Furthermore, when compared to optimal allocations based on the individual's own judgments, individuals show preference toward allocating resources to acts for which the functional relation is more certain. Thus the assumptions of contingency theorists were violated. The need for further investigation into decision processes under uncertainty is discussed.
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