Risk vs. Uncertainty Quiz

15 Questions

What is the main difference between risk and uncertainty?

Risk involves knowing the probabilities of outcomes, while uncertainty does not involve attaching probabilities to outcomes.

What influences risk perception according to the text?

Biases, shocks, and individual characteristics

What is an example of how biases influence risk perception?

Only acquiring info that confirms the hypothesis, without checking the falsifying cases

How does gender influence risk perceptions according to the text?

Females tend to rate risk higher than males

What is an example of how shocks influence risk perception according to the text?

Mexican drug war - when local crime rates grew, people perceived themselves to be at a lower risk of falling victim to crime

Risk - don’t know what will happen, but can attach probabilities to the outcomes o Example: Digging for oil in an explored area - the estimated chance of finding oil when digging down in the specific area is 0.6 (not finding - 0.4) Uncertainty - don’t know what will happen, but can’t attach probabilities to the outcomes o Example: Digging for oil in an unexplored area - no estimated chance, it is just possible to find or not to find oil Are risk perceptions the result of ______.

biases but also shocks and individual characteristics

How biases influence risk perception: confirmation bias (only acquiring info that confirms the hypothesis, without checking the falsifying cases), consent heuristic (leads people to adopt the common/majority point of view even if wrong), illusion of control (believing that risks can be controlled by own behaviour) optimistic and pessimistic ______.

bias

Example: Mexican drug war - when local crime rates grew, people perceived themselves to be at a higher risk of falling victim to ______.

crime

How does risk vary with individual ______.

characteristics

Example: gender influences risk perceptions, females tend to rate risk higher than ______.

males

What is the difference between risk and uncertainty?

Risk is when you don't know what will happen but can attach probabilities to the outcomes. Uncertainty is when you don't know what will happen and can't attach probabilities to the outcomes.

How do biases influence risk perception?

Biases influence risk perception through factors such as confirmation bias, consent heuristic, illusion of control, optimistic bias, and pessimistic bias.

Give an example of how shocks influence risk perception.

An example of how shocks influence risk perception is the Mexican drug war, where local crime rates growing led people to perceive themselves to be at a higher risk of falling victim to crime.

How does gender influence risk perceptions?

Gender influences risk perceptions, with females tending to rate risk higher than males.

What is an example of how individual characteristics influence risk perception?

An example of how individual characteristics influence risk perception is gender, where females tend to rate risk higher than males.

Study Notes

Risk and Uncertainty

Risk: don't know what will happen, but can attach probabilities to the outcomes
Example: digging for oil in an explored area, with an estimated chance of finding oil as 0.6 (not finding: 0.4)
Uncertainty: don't know what will happen, but can't attach probabilities to the outcomes
Example: digging for oil in an unexplored area, with no estimated chance of finding oil

Influences on Risk Perception

Biases: confirmation bias, consent heuristic, illusion of control
Example: Mexican drug war, where people perceived themselves to be at a higher risk of falling victim to crime when local crime rates grew
Individual characteristics: optimistic and pessimistic tendencies
Example: gender influences risk perceptions, with females tend to rate risk higher than males

Biases and Risk Perception

Biases influence risk perception by distorting reality
Confirmation bias: only acquiring information that confirms the hypothesis, without checking the falsifying cases
Consent heuristic: leads people to adopt the common/majority point of view even if wrong
Illusion of control: believing that risks can be controlled by own behavior

Shocks and Risk Perception

Shocks influence risk perception by increasing perceived risk
Example: Mexican drug war, where people perceived themselves to be at a higher risk of falling victim to crime when local crime rates grew

Individual Characteristics and Risk Perception

Individual characteristics influence risk perception
Example: gender influences risk perceptions, with females tend to rate risk higher than males

Test your understanding of risk and uncertainty with this quiz. Explore the differences between actual risk, perceived risk, and risk aversion while learning to distinguish between attachable probabilities and unattachable probabilities in different scenarios.

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