An investigation of biases and framing effects for risk analysis: An information technology context

An elusive and problematic theme of risk management has been managers' ability to effectively measure information technology (IT) risk in terms of degree of impact and probability of occurrence. The background of this problem delves deep into the rational understanding of probability, expected value, economic behavior, and subjective judgment. This research provides an instrument and means of measurement to record decision outcomes that are susceptible to biases, heuristics, and framing effects as well as respondents' confidences in those decisions. Sample response frequencies were analyzed to determine the existence of risk propensity, framing effects, and heuristics within the sample. Key discoveries included a risk propensity encoding structure, a descriptor validation scheme, and model for comparing different bias and heuristic types. Descriptor analysis for the specific sample showed that questions worded in an IT context cued totally different response outcomes than those in a non IT context.