Risk Shifting in Joint Consumer Decision Making

ABSTRACT - Differences in risk taking for autonomous versus joint decisions involving consumer situations are investigated in this study. The risky shift phenomenon, found in the psychological literature, provides the basis for expecting shifts in risk from individual to joint decisions. Choice dilemmas were developed to assess levels of acceptable risk for six different types of loss. Subjects displayed both risky and caution shifts in their decision making. Differences occurred between males and females and the negative consequences associated with the risky alternative also explained some of the risk shifting.


Maureen Coughlin and P. J. O'Connor (1984) ,"Risk Shifting in Joint Consumer Decision Making", in NA - Advances in Consumer Research Volume 11, eds. Thomas C. Kinnear, Provo, UT : Association for Consumer Research, Pages: 165-169.

Advances in Consumer Research Volume 11, 1984      Pages 165-169


Maureen Coughlin, Baruch College, CUNY

P. J. O'Connor, Baruch College, CUNY


Differences in risk taking for autonomous versus joint decisions involving consumer situations are investigated in this study. The risky shift phenomenon, found in the psychological literature, provides the basis for expecting shifts in risk from individual to joint decisions. Choice dilemmas were developed to assess levels of acceptable risk for six different types of loss. Subjects displayed both risky and caution shifts in their decision making. Differences occurred between males and females and the negative consequences associated with the risky alternative also explained some of the risk shifting.


The idea that purchasing is, in a sense, risk taking was first introduced into the marketing literature by Bauer (1960). He noted that consumers are faced with uncertainty about the consequences which will eventuate from a purchase decision and that at least some of these consequences may be negative. This subjective multiple of uncertainty and negative consequences is referred to as perceived risk. Over the years studies have focused on the causal antecedents of risk (Cox and Rich 1967; Schiffman 1972; Bettman 1973; Arndt 1967), the types of risk (Roselius 1971), and methods used by consumers to reduce risk (Arndt 1967; Cunningham 1967; Roselius 1971). The concept has been linked to brand and store loyalty, shopping strategies, information gathering, situational effects, time pressure, and the like. A review of much of this research is presented by Ross (1974).

However, this stream of research has primarily been concerned with the perceived risk involved in individual decision making. The unit of analysis has been a specific consumer. In actuality. a large number of consumer decisions are made jointly, especially in syncratic families. In his review of the literature on family decision making, Davis (1976) notes that group decision making is considered to differ in some important respects from individual decision making. However, a good deal of the emphasis in consumer research is still on the individual and not necessarily relevant to group decision making processes.

Much of the research on family decision making concentrates on the interaction between husbands and wives and their ability to influence, bargain, accommodate, agree, persuade, or assume specific roles in consumption related decisions (Davis 1976). This study addresses another dimension in the decision process: the willingness of the individual to assume more or less risk in a dyadic versus individual decision. For example, a husband may hesitate to purchase a consumer durable by mail order due to an unwillingness to take the risk of a major purchase sight unseen. However, when making the same decision jointly with his wife, he might be willing to assume greater risk because the responsibility for a wrong decision is no longer his alone. The purpose of this study is to investigate how consumers differ in their approach or avoidance of risk in autonomous versus joint decisions. This knowledge will help marketers understand differences in risk taking resulting from the interpersonal influence involved in joint decision making.


The psychological literature contains a well developed area of inquiry dealing with the effect of group decisions on willingness to take risk. First introduced by Stoner (1961) and expanded by Wallach, Kogan and Bem (1962), this group influence is known as risky shift. Basically, risky shift describes the greater amount of risk that an individual is willing to take when making a decision with a group than when deciding alone. Most investigations of risk shifting have made use of the choice dilemma questionnaire (CDQ) developed by Kogan and Wallach (1964) which consists of twelve scenarios of a general nature. In each scenario, subjects are presented with a hypothetical situation describing an individual faced with a choice wherein one alternative leads to a more desirable albeit less certain outcome. Subjects are asked to make an individual and then a group assessment of the lowest probability of the desirable outcome occurring acceptable to recommend that the hypothetical person pursue the risky alternative. Autonomous versus group scores indicated that, in contraSt to conformity notions, groups make significantly riskier assessments than do individuals.

During the decade of the 1960's, a number of studies demonstrated repeatedly that the risky shift is dependable, occurring across differing ages, genders and occupations. The focus of these studies was to derive an explanation for the occurrence of the phenomenon. A number of competing explanations were advanced. Felsenthal (1979) categorizes risk studies into four classes of explanations: (l) high risk takers disproportionately influence group members (Clasen 1965; Wallach, Kogan and Burt 1968); (2) increased familiarity induces group members toward riskier choices (Bateson 1966; Flanders and Thistlethwaite 1967); (3) group discussion activates a cultural value favoring risk taking (Brown 1965; Stoner 1968); (4) group decisions are riskier because responsibility for the consequences is diffused among group members (Wallach, Kogan and Bem 1964).

More recently, it has been found that shifts in assessed probabilities depend upon characteristics of the hypothetical dilemmas employed in the study. Salience, defined as the importance of the decision to the subjects involved, was found by Blity and Dansereau (1972) to be related to caution shifts. The more salient the risk to the individual the more likely that he/she will take less risk in a group. Ridley, Young and Johnson (1981) divided importance into two major components: the degree to which the outcome is meaningful to the individual in terms of experience and the magnitude of the outcome (i.e., the cost of a wrong decision). They found that the presence or absence of choice shifts may depend in an important way on the relevancy and cost of the dilemmas.

In a critical review of the literature Cartwright (1973) notes that there is no general risky shift in an unqualified sense. For example, the CDQ when aggregated across the twelve scenarios produced reliable risky shifts, but when disaggregated the effect no longer applies. In the disaggregated analysis, some items produce risky shifts, but some produce caution shifts, and some fail to bring about shifts of either kind. In addition, new items similar to the CDQ have been constructed which generate caution shifts consistently. (A caution shift is described as a willingness to take less risk in a group decision).

It has also been proposed that the existence of the risky shift phenomenon may be due to the inability of subjects to understand the instructions typically used. Studies focusing on validity check questions concerning the relationship between probability and risk found several subjects who apparently did not understand probability problems (Reingen 1976; Reingen and Kernan 1977). However, Hensley (1977) found the misunderstanding of probabilities not to be an explanatory factor.

Roberts (1975) and Seeborg, LaFollette and Belohlav (1980) found support for gender differences in risk proneness. Jacobson (1977) reported that risky shifts, but not caution shifts, appear to be dependent on subjects being able to distort their recall of their initial position. One study investigated risk shifting using dyads as the groups of interest (Virma and Sinha 1981). The focus of this investigation was the effect of nationality upon willingness to engage in criminal behavior. No significant effects were found

The implications of the psychological research has been far removed from consumer decision making. Studies have addressed the social desirability of having individuals or groups make decisions concerning criminal guilt, parole, surgery, gambling, and the like. Indeed, more than one paper has expounded upon the dangers of having a committee decide the launching of a nuclear attack (Cartwright 1973).

Investigations of shifts in acceptable risk in a consumer environment are certainly limited. Woodside (1972) used groups of six housewives for measuring risk shifting across eight product choices tapping financial risk. The shift scores were an aggregate of all eight decisions. This study was criticized by Reingen (1974) for external validity problems, a moot point in an exploratory study. Another study employing consumer related dilemmas involving financial and socio-psychological risk for three person groups was conducted by Reingen (1977). Some support was found for the hypothesis that skewness in individual scores can account for the risky shift phenomenon. This is a specific type of majority decision rule suggested by Cartwright (1971) as accounting for a large portion of choice shifts.


Groups consisting of dyads can not have majority effects. Whether choice shifts occur in such groups is not at all known. In point of fact, a large number of products are purchased for household consumption by husbands and wives jointly. There is some evidence to indicate that joint decision making is on the increase (Cunningham and Green 1974). Therefore, the choice dilemmas used in this study are assessed individually and then later as a joint, two person mixed gender, decision.

In making consumption related decisions, couples are faced with more than just the two types of risk used in prior consumer studies. Six different types of risk appear in the literature (Roselius 1971; Schiffman and Kanuk 1972). Accordingly, this study consists of six choice dilemmas dealing with financial, physical, social, functional, time loss, and psychological risk in turn.

As noted earlier, the literature in psychology provides evidence of gender variations in risk shifting in group decision making situations. However, these studies have ignored couples as the decision group. Consumer reactions to the risk situations tested in this study will provide insight into gender influence in joint decisions with implications regarding husband-wife decision making. The basic hypothesis in this investigation is that consumers will display risk shifting in mixed gender joint decision making situations This will be tested across the six different types of risk with the expectation that males and females differ in their shifting of risk. In light of the literature reviewed, ancillary hypothesis to be investigated include the degree of risk shifting is related to prior experience, importance, or the cost of making the decision.


Risk dilemmas relating to the six types of risk were developed for this study. The dilemmas concerned differing risk situations involving consumer decisions. In each, one alternative led to a more desirable but less certain outcome. The task was to assess the lowest probability of the desirable outcome occurring that would be acceptable to the subject for choosing that alternative. The dilemmas separately portrayed the six types of risk. Each situation clearly specified the potential negative consequences. For example, the subject is faced with the dilemma of having a loathsome insect infestation with the only effective pesticide carrying the physical risk of possibly causing lung damage. The scenarios were fashioned in a manner similar to the CDQ widely used in psychology. A pilot study was undertaken to assess the appropriateness of each situation as depicting the intended risk for validation of the choice dilemmas, e.g., does the scenario developed to test for shifts in financial risk actually depict financial risk?

The study required the assessment of probabilities in ; autonomous and a joint decision condition. Thus, each respondent first addressed the six dilemmas individually and then with a partner of the opposite sex. The responses required in the choice dilemmas involved probabilities of favorable outcomes occurring. Therefore, some ten minutes of instruction on the meaning of probabilities preceded the collection of data.

Subjects were individually presented with the choice dilemmas in questionnaire form and were unaware that they would be jointly assessing these same dilemmas later on in the study. After completing their autonomous decisions, all questionnaires were collected by the experimenter. Subjects were then randomly assigned to mixed gender couples and given a new questionnaire. They were instructed to reach a joint decision on the same six dilemmas. Subjects remained anonymous but coded the questionnaires in such a way that individuals could be identified for comparison analysis.

The subjects employed were 120 graduate and undergraduate business students. As a result, the choice dilemmas were written to be relevant to this subject population. Also, they were written to be appropriate for both individual and joint decision making. The generalizability of the findings to naturally occurring dyads is limited by the use of this sample. However, gender differences in a joint two person decision were investigated as a first step toward future research dealing with married couples. Therefore, it was deemed appropriate to employ a sample that would tend to minimize extraneous demographic and psychographic differences as these variables were relatively homogeneous among the subjects.


Similar to the CDQ used in psychology, subjects in this study were asked to indicate an acceptable level of risk for choosing an alternative in a given dilemma. Risk was measured on a ten point scale. The probabilities were specified as how many chances out of ten that a favorable outcome would occur are necessary before choosing the risky alternative. For example, one person faced with the dilemma of treating insects with a potentially toxic chemical might require that there be only five chances out of ten that the pesticide is not harmful, while a more cautious person might require nine chances out of ten.

In this study, the measure of risk shifting differs in two ways from the usual psychological CDQ. First, there are six consumer oriented dilemmas involving different types of risk as opposed to twelve general dilemmas in the CDQ. Second, subjects in this study were asked to respond as though they were confronted with the dilemma. In the CDQ, respondents are instructed to imagine that they are advising a hypothetical person facing the situation and choose an acceptable probability for that person. The measure employed here reflects the actual level of risk a consumer would take and not a less personal recommendation to some hypothetical individual.

The appropriateness of the choice dilemmas for depicting the intended risk was determined by the pilot study. Thirty-six subjects were presented with the six dilemmas and asked to identify the type of risk portrayed. The different types of risk were briefly defined on the first page of the questionnaire. In addition a seven point scale measure of how well the situation represented the risk was administered after each dilemma.

It was noted in the literature reviewed that some subjects misunderstand the relationship between probability and risk in the usual CDQ. Accordingly, a validity check was included at the end of the questionnaire used in the autonomous condition. The question utilized as the validity check was developed by Reingen and Kernan (1977).

Also, as previously noted, the occurrence of risk shifting may be due to the specific characteristics inherent in the choice dilemmas. Therefore, subJects were asked to evaluate each dilemma as to its importance, relevance, and severity of the consequences to the individual. These dimensions were measured on seven point Likert-type agree/ disagree scales. At the end of the joint decision making session, the subjects were asked to report on who was the most influential person, if any, in the decision process.


The appropriateness of the consumer scenarios as depicting particular types of risk is clearly confirmed. (See Table l). Each situation was identified as portraying the intended type of risk. In addition, there was fairly strong agreement that the situation represented that type of risk very well.



Of the 120 participants in this study there were 97 usable responses. The remaining questionnaires were not useful because the respondent either forgot to code his/ her questionnaire with an identification number or they were eliminated on the validity check on their understanding of probabilities. The identification number was necessary in order to compare responses in the autonomous condition to the joint decision.

A t-test between the means scored on the probability scale in the autonomous and joint decisions reveals significant results. Initially, the probability scores were aggregated for all six dilemmas. The total shift in risk across situations proved to be insignificant (t = .43, level of significance = .67). A breakdown of the total scores by gender also showed no significant differences (women: t = .03, level of significance = .97; men: t = .74, level of significance = .46). However, when the probability scores for the scenarios were analyzed on a disaggregated basis significant results were found (see Table 2). The data show that shifts in risk occur in joint decisions for two types of risk- social and functional. This analysis also indicates that risky shift only occurs in the social situation, a cautious shift occurs in the functional risk situation. There is a directional indication that risky shift may occur in the psychological risk dilemma.



The data are further analyzed to investigate gender as a factor in the shifting of risk. (See Tables 3 and 4). The data indicate that women are taking more risk in a joint decision involving social risk than they were willing to take individually. Meanwhile, men are taking less risk in the joint decision involving functional risk than they were willing to take individually. Men directionally showed risky shift in the psychological risk situation. Significant differences were found for men and women on the physical risk dimension. In joint discussions, women are making riskier decisions and men are making more cautious decisions for physical risk. A t-test comparing the mean probability scores for men and women against the average difference in risk shifting was undertaken to test if there were any risk situations, other than physical, where males and females influenced each other and compromised. The only significant difference found was for physical risk (t = -2.93, level of significance = .004). The self reported measure on the influence of each partner on the decision process indicated that men and women shared the decision equally (91 percent reported equal influence in the decision process).





In a stepwise regression analysis, risk shifting as a function of the importance of the decision to the individual, its relevance in terms of the subject's experience, and the perceived negative consequences from making a wrong decision, was evaluated. The only characteristic that was significantly related to shifts in risk was the perceived negative consequences from making a wrong decision in a given situation. This dimension was significant for the financial and physical risk decisions (financial risk: r = .20, level of significance = .04; physical risk: r = .33, level of significance = .001).


No general risky shift appears in the consumer decisions investigated. Some risk dilemmas produce risky shift, some produce cautious shift, and others result in no shift of risk at all. (These findings are consistent with research in psychology, noted previously, that investigated the disaggregated results of the CDQ and found different risk shifts on various dilemmas). Although the perceived negative consequences of making a wrong decision is a significant factor explaining shifts in risk for some of the dilemmas, the amount of variation explained is low.

Gender appears to be a factor in consumer risk taking. Women displayed a risky shift in social risk situations; men displayed a cautious shift in the functional risk situation. Also there is a directional indication that men take a risky shift in the psychological risk dilemma. The physical risk dilemma produced risk shifts for males and females. It appears that they compromised each others' decisions as men took a cautious shift and women a risky shift.

Joint decisions on dilemmas involving financial and time loss risks did not indicate any risk shifting. The generalizability of these findings to joint decision making is limited by sample design. The subjects participating in this study were relatively unfamiliar partners. Most joint consumer decisions involve familiar partners, e.g., husband-wife decisions.

That groups invariably take more risk than individuals, the basic notion of risky shift, is not supported by this study. However, the thesis that shifts in risk taking, cautious and risky, occur in joint discussions is suggested by the data. Future research is needed to explain the interpersonal influences that produce changes in risk levels. An early priority should be the investigation of risk shifting between natural dyads-for example, married couples.


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Maureen Coughlin, Baruch College, CUNY
P. J. O'Connor, Baruch College, CUNY


NA - Advances in Consumer Research Volume 11 | 1984

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