A Psychological Study of the Inverse Relationship Between Perceived Risk and Perceived Benefit
Abstract
Judgments of risk and judgments of benefit have been found to be inversely related. Activities or technologies that are judged high in risk tend to be judged low in benefit, and vice versa. In the present study, we examine this inverse relationship in detail, using two measures of relationship between risk and benefit. We find that the inverse relationship is robust and indicative of a confounding of risk and benefit in people's minds. This confounding is linked to a person's overall evaluation of an activity or technology. Theoretical and practical implications of this risk-benefit confounding are discussed.
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The finding that investors believe both that performance will be superior and that risk will be lower for funds rated high in sustainability is consistent with existing research in psychology.
“Although the nding that investors believe both that performance will be superior and that risk will be lower for funds rated high in sustainability may appear surprising, it is consistent with existing research in psychology.”
From Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows (2019) · cites this paper as Alhakami and Slovic 1994
People rely on affect and emotion rather than reasoned analysis to assess attributes of a given stimulus and make subsequent decisions.
“This research posits that people rely on aect and emotion -rather than reasoned analysis -to assess attributes of a given stimulus and make subsequent decisions.”
From Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows (2019) · cites this paper as Alhakami and Slovic 1994
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- Authors
- Alhakami, A. S., & Slovic, P.
- Affiliations
- Imam Mohammad ibn Saud Islamic University (SA)
- Corresponding author
- Slovic, Paul
- ORCID
- Slovic, Paul
- Venue
- Risk Analysis
- Publisher
- Wiley
- Published
- 1994-12
- Volume
- 14
- Issue
- 6
- Pages
- 1085-1096
- ISSN
- 0272-4332 (ISSN-L)
- 1539-6924
- OpenAlex
- W2037588148
- Cited by
- 1,151
- References
- 3
- Citations by year
- 2026: 35 · 2025: 38 · 2024: 53 · 2023: 38 · 2022: 53 · 2021: 70 · 2020: 68 · 2019: 48 · 2018: 49 · 2017: 47 · 2016: 51 · 2015: 69 · 2014: 57 · 2013: 45 · 2012: 43
- FWCI
- 27.40
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Risk Analysis (publishedVersion)
- PubMed (publishedVersion)
- Scholars' Bank (University of Oregon) (submittedVersion)
- Funders
- Alfred P. Sloan Foundation
- Topics
- Social Sciences › Sociology and Political Science › Risk Perception and Management
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic and Environmental Valuation
- Keywords
- risk perception, perceived benefits, technology evaluation, public attitudes toward technology
- MeSH terms
- Adult, Factor Analysis, Statistical, Humans, Judgment, Oregon, Perception, Regression Analysis, Risk, Risk-Taking
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