Danger! Danger!

Faulty risk perception could hurt our decision making

Ready to gamble on a big decision? Wait one minute and keep reading. Decades of consumer judgment and decision-making research suggest that accurately estimating risk isn’t our strong suit. According to Daniella M. Kupor, an assistant professor of marketing, a misfiring perception of possible dangers is to blame.

In a paper published in the Journal of Consumer Research in 2016, Kupor finds that when an already risky option has additional smaller risk thrown onto it, we perceive the option as less risky. “A medical drug with a potential side effect of seizures is viewed as less threatening when it also has smaller potential side effects, such as congestion and fatigue,” according to the article’s abstract.

“People generally assume that smaller outcomes are more likely than larger ones,” says Kupor. “When a small outcome is added to a larger one, people feel that they’re even less likely than ever to experience the larger outcome. This is because a small probability feels even smaller in the context of a bigger probability.”

Kupor hopes this insight can help consumers make better choices: public service campaigns encouraging people to reduce smoking, for example, could be more effective if they “highlight one big risk of smoking, rather than highlight both big and small risks.”

Read about other Questrom decision-making research—and get tips for making the right call—at bu.edu/everett/fall-2016.