1.1 RESEARCH BACKGROUND AND PURPOSES
Over the past 70 years, attempts to understand how people make decision under risk have been elaborated by many scholars so that significant accounts have been documented through the different lens ranging from economic (expected utility theory; von Neumann & Morgenstern, 1944), cognitive (prospect theory; Kahneman
& Tversky, 1979), and affective (regret theory; Loewenstein, Weber, Hsee, & Welch, 2001), to motivational (regulatory focus theory; Scholer, Fujita, Stroessner, &
Higgins, 2010) perspectives. Such an eclectic approach to the analysis of decision under risk has provided a valuable contribution in the broad stream of management research including negotiations, emotion and motivation, human resource management, organizational risk – return relations, and strategic risk-taking behaviors (Holmes, Bromiley, Devers, Holcomb, & McGuire, 2011).
Nevertheless, two important concerns can be raised regarding their direct assessment of evaluations with standard self-report measures of risk; choice sets involving two risky prospects are a good example. First, the above studies present an over-reliance on a person’s conscious judgmental processes of evaluating expected utility or perceived value that s/he forms based on information about possible outcomes and their probabilities. However, if the way people process information about themselves and their environment operates not only in a deliberately monitored manner, but also in a spontaneously activated manner (Evans, 2008), participants’ self-reports of choices between risky prospects may not reflect their non-conscious or automatic evaluations of outcome and probability information due to lack of ability to report on these cognitive and affective processes that occur outside conscious control (i.e., introspective limits; Greenwald, Banaji, Rudman, Farnham, Nosek, & Mellott, 2002). Rather, the reports might reflect their conscious or controlled evaluative judgments about temporarily given information, that is, outcomes and probability that are not only anchored at a certain point, but also disparate across studies, which may limit generalizability of findings explored in any particular study.
Besides, earlier studies on implicit social cognition suggest that the cognitive processes operating outside of awareness (i.e., implicit processes) are also actively involved in the development of behavioral responses and psychological outcomes.
In fact, a meta-analysis of 152 studies has provided significant evidence for mutual incremental validity of explicit (self-report) and implicit (IAT; Implicit Association Test; Greenwald, McGhee, & Schwartz, 1998) measures, indicating that each measure provided unique variance in criterion behavior that was not accounted for by the other across different domains including gender orientation, personality
use, and clinical phenomenon ( = .18 and = .32, respectively – see Greenwald, Poehlman, Uhlmann, & Banaji, 2009). Also, recent works on behavioral finance provide support for the dual (i.e., explicit and implicit) cognitive approach to risk.
As an example, a transcendent model developed by Cheng (2010) suggests that an integration of unconscious thought into the existing explicit decision-making process potentially improves the quality of financial judgment and investment decision by compensating for inherent limitations (e.g., cognitive overload) of conscious thought on information processing capacity.
Another issue with self-report measures of risk relates to a potential susceptibility to response bias, which can be also applied to binary-choice between risky prospects. Normatively, people should base their choices on unbiased assessments of relevant information such as a description of possible outcomes and their probabilities in risky choices. However, a series of studies involving risk choices under six hypothetical scenarios has found both student and non-student participants to be biased in their evaluations of outcome and probability information in a way favorable to their preferred decision alternative, and subsequently, these biased evaluations are again used to update their preferences (DeKay, Patiño-Echeverri, & Fischbeck, 2009). In addition, social desirability bias has also been identified as one of the most common and pervasive factors that might diminish the accuracy of self-report tests in a variety of risk-related topics such as socially approved risk-taking and reckless behavior (Bradley & Wildman, 2002; Ronay & Kim, 2006), health-risk behavior (Brener, Billy, & Grady, 2003), consumer innovativeness (Tellis, Yin, & Bell, 2009), and sexual behavior (Kelly, Soler-Hampejsek, Mensch, & Hewett, 2013).
Taken together, the problems of introspective limits and response factors suggest that the construct of interest – in this case, risk – needs to be indirectly measured by using the IAT that is known to circumvent introspective limits (Egloff
& Schmukle, 2002), social desirability bias (Banse et al., 2001), and even voluntary distortion (Kim, 2003) to assess an additional construct of risk that is distinct, but related, to self-report assessments.
1.2 THE PRESENT STUDY
A primary goal of the present study is to introduce a new perspective known as implicit social cognition (Greenwald & Banaji, 1995) to risk research, hoping to complement extant economic, cognitive, affective, and motivational approaches to decision under risk by using two IAT variants that have been designed to target a domain-general and domain-specific risk construct – Implicit Risk Task (IRT; Ronay
& Kim, 2006) and Implicit Stock Investment (ISI; Park, Kim, & Oh, 2017), respectively. Encouraged by the fact that the IAT reflects the strength of automatic concept – attribute associations a person has experienced in their personal, societal, and cultural environment (Karpinski & Hilton, 2001; Olson & Fazio, 2004), I believe the implicit measures of risk may allow me to not only provide a thorough
comparison for cross-national and socio-generational differences in risk that have been documented from previous studies using self-report measures, but also improve explanatory power for individual variations in risk-taking behaviors.
For this reason, I perform a series of studies with different purpose. By comparing South Korean and Chinese (referred to as collectivists), and Australian (referred to as individualists) undergraduate samples, Study 1 analyzed: (i) whether construct divergence between explicit (self-report) and implicit (IRT) measures of risk is cross-nationally validated; and (ii) how the three national groups differ in their conscious and non-conscious evaluations of risk; and (iii) whether cross-national differences observed from a recent study using explicit measures (Park, Kim, & Zhang, 2016) are replicated in implicit measures of risk.
Study 2 also tested (i) construct divergence in a sample of Korean adults aged 30 – 50 years; and (ii) whether the IRT indeed captures socio-generational differences in risk, which have been hardly detected from self-report measures of risk, by comparing Korean undergraduate and adult samples. Finally, a predictive power of the ISI on stock investment performance was tested in Study 3 examining a sample of financial engineering-major undergraduates, with a particular emphasis on a complementary interplay between explicit and implicit measures of stock investment that is presumed to improve the quality of financial judgement and investment decision (Cheng, 2010).