Home > Articles > Business & Management

  • Print
  • + Share This
This chapter is from the book

Risk Perception and Choice

Whereas risk assessment focuses on objective losses such as financial costs, risk perception is concerned with the psychological and emotional factors associated with risk. Research has demonstrated that the perception of risk has an enormous impact on behavior, regardless of the objective conditions.

In a set of path-breaking studies begun in the 1970s, decision scientists and psychologists such as University of Oregon's Paul Slovic, Carnegie Mellon University's Baruch Fischhoff, and others began studying people's concerns about various types of risks. They found that people viewed hazards with which they had little personal knowledge and experience as highly risky, and they especially dreaded their possibility. In the case of unfamiliar technologies with catastrophic potential such as nuclear power, people perceived the risks as much higher than did the experts.2

Research also found that people often perceive the world of low-probability and high-consequence events quite differently from experts, and that this impacts on their decision-making process and choice behavior. For years, however, this disparity was simply ignored by expert analysts, who made little effort to communicate the inventory, hazards, vulnerability, and losses from risks in ways that the public could accept and act upon. Sometimes, important underlying assumptions were not made explicit; other times, complex technical issues were not explained well; and often, little effort was made to help the public appreciate why experts could disagree with one another. Rarely were public perceptions even considered.

In recent years, however, the scientific and engineering communities have devoted increased attention to the psychological factors that impact on how individuals make decisions with respect to risks from natural and technological hazards. Rather than simply urging policy makers and organizational leaders to take actions on the basis of their traditional risk-assessment models, experts are increasingly incorporating salient human emotions such as fear and anxiety into the models.

Researchers have discovered that people are generally not well prepared to interpret low probabilities when reaching decisions about unlikely events. In fact, evidence suggests that people may not even want data on the likelihood of a disastrous event when the information is available to them. One study found, for instance, that when faced with several hypothetical managerial decisions that are risky, individuals rarely ask for data on the probabilities of the alternative outcomes. When one group was provided limited information about the choices they were facing and given an opportunity to find out more about their risks, fewer than one in four requested information on the probabilities, and none sought precise likelihood data. When another group was presented with precise probability data, fewer than one in five drew upon the concept of probability when making their choices between alternative courses of action.3

If people do not think probabilistically, how then do they make their choices in the face of risk? Extensive research on decision making now confirms that individuals' risk perceptions are affected by judgmental biases.4 One of the important forms of bias in the case of extreme events such as large-scale disasters is a tendency for people to estimate the risk they face on the basis of their own experience regardless of what the experts may have communicated. If an event is particularly recent or impactful, people tend to ignore information on the likelihood of a recurrence of the event and focus their attention on the consequences should another similar disaster occur.5 Following the terrorist attacks with hijacked aircraft on September 11, 2001, many of those living in the United States refused to fly because they believed that the chances of ending up on a hijacked aircraft were dangerously high—even though the actual likelihood was extremely low given the tightened security measures introduced in the wake of 9/11.

More generally, researchers have found that people tend to assess low-probability, high-consequence events by focusing on one end of the likelihood spectrum or the other: For some people, such events will surely happen, for others they will surely not happen, and few fall in between. For very unlikely events, however, people crowd toward the "will not happen" end of the spectrum. It is for this reason that there is a general lack of public interest in voluntarily purchasing insurance against natural disasters and in investing in loss-protection measures. People underestimate both the probability of a disaster and the accompanying losses, and they are often myopic when it comes to proper planning for disasters. If a disaster does occur, people then tend to overinvest in seeking to prevent a recurrence. Protective measures are thus undertaken when it is too late. A study of homeowners in California, for example, showed that most purchased earthquake insurance only after personally experiencing an earthquake. When asked about the likelihood of another quake occurring in their area, they correctly responded that it was lower than prior to the disaster because the stress on the fault had been reduced. And yet that is when they finally decided to acquire the insurance.6

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020