Measuring Consumer Risk-Return Tradeoffs

Daniel Goldstein, London Business School, UK
Consumer choice occurs over multiple products and services, each comprising multiple risks. In this paper, we present a new market research technique to acquire fine-grained information about consumers’ preferences over a large space of risks in little time. We first describe the method, present its psychological and analytical motivation, and then report the results of empirical tests of reliability and validity, both within testing sessions and across the span of one year. The new technique is ideal for discovering clusters of consumers based on risk preferences, for instance those best fit by classical models, and those best fit by loss-averse behavioral models.
[ to cite ]:
Daniel Goldstein (2009) ,"Measuring Consumer Risk-Return Tradeoffs", in NA - Advances in Consumer Research Volume 36, eds. Ann L. McGill and Sharon Shavitt, Duluth, MN : Association for Consumer Research, Pages: 82-85.