Decision-Making Under Risk: Integrating Perspectives From Biology, Economics, and Psychology

• Published in: Personality and social psychology review 2014-08, Vol.18 (3), p.280-307
• Main Author: Mishra, Sandeep
• Format: Article
• Language: English
• Subjects: Behavior; Decision making; Economics; Integration; Risk assessment
• ISSN: 1088-8683; 1532-7957
• DOI: 10.1177/1088868314530517

Decision-making under risk has been variably characterized and examined in many different disciplines. However, interdisciplinary integration has not been forthcoming. Classic theories of decision-making have not been amply revised in light of greater empirical data on actual patterns of decision-making behavior. Furthermore, the meta-theoretical framework of evolution by natural selection has been largely ignored in theories of decision-making under risk in the human behavioral sciences. In this review, I critically examine four of the most influential theories of decision-making from economics, psychology, and biology: expected utility theory, prospect theory, risk-sensitivity theory, and heuristic approaches. I focus especially on risk-sensitivity theory, which offers a framework for understanding decision-making under risk that explicitly involves evolutionary considerations. I also review robust empirical evidence for individual differences and environmental/situational factors that predict actual risky decision-making that any general theory must account for. Finally, I offer steps toward integrating various theoretical perspectives and empirical findings on risky decision-making.