| Whereas we were once believed to be logical, information processing decision-makers, Prospect Theory demonstrated the true nature of man as a heuristic processor and irrational chooser. As businesses and governments move toward choice architecture that maximizes individual benefits, identifying the origin of sub-optimal choosing has taken center stage. Risk-taking is the most appropriate domain for studying decision-making and individual preferences. Disparity in individual risk preferences between contexts is widely reported, but few investigations offer attempts at understanding the origin of risk preference in a manner congruent with the tenets of Prospect Theory. This investigation proposes that experienced environmental scarcity in context is the origin of context-reliant risk preferences. Additionally the dissertation evaluates a methodology to capture the component parts of individual valuation as a means of understanding how scarcity affects risk preferences. |
