Risk has become one of the main topics in fields as diverse as engineering, medicine and economics, and it is also studied by social scientists, psychologists and legal scholars. But the topic of risk also leads to more fundamental questions such as: What is risk? What can decision theory contribute to the analysis of risk? What does the human perception of risk mean for society? How should we judge whether a risk is morally (...) acceptable or not? Over the last couple of decades questions like these have attracted interest from philosophers and other scholars into risk theory. This handbook provides for an overview into key topics in a major new field of research. It addresses a wide range of topics, ranging from decision theory, risk perception to ethics and social implications of risk, and it also addresses specific case studies. It aims to promote communication and information among all those who are interested in theoetical issues concerning risk and uncertainty. This handbook brings together internationally leading philosophers and scholars from other disciplines who work on risk theory. The contributions are accessibly written and highly relevant to issues that are studied by risk scholars. We hope that the Handbook of Risk Theory will be a helpful starting point for all risk scholars who are interested in broadening and deepening their current perspectives. (shrink)

Apart from its foray into technical issues of risk assessment and management, this book has one principal aim. With situations of chancy outcomes certain key factors—including outcome possibilities, overall expectation, threat, and even luck—are measurable parameters. But risk is something different: it is not measurable a single parametric quantity, but a many-sided factor that has several different components, and constitutes a complex phenomenon that must be assessed judgmentally in a highly contextualized way. This book explains and analyzes how (...) this works out in practice. Topics in this work include choice and risk, chance and likelihood, as well as outcome-yield evaluation and risk. It takes into account abnormal situations and eccentric measurements, situational evaluation and expectation and scrutinizes the social aspect of risk. The book is of interest to logicians, philosophers of mathematics, and researchers of risk assessment. The project is a companion piece to the author's LUCK THEORY, also published by Springer. (shrink)

Prospect Theory: For Risk and Ambiguity, provides a comprehensive and accessible textbook treatment of the way decisions are made both when we have the statistical probabilities associated with uncertain future events and when we lack them. The book presents models, primarily prospect theory, that are both tractable and psychologically realistic. A method of presentation is chosen that makes the empirical meaning of each theoretical model completely transparent. Prospect theory has many applications in a wide variety of (...) disciplines. The material in the book has been carefully organized to allow readers to select pathways through the book relevant to their own interests. With numerous exercises and worked examples, the book is ideally suited to the needs of students taking courses in decision theory in economics, mathematics, finance, psychology, management science, health, computer science, Bayesian statistics, and engineering. (shrink)

A de minimis risk is defined as a risk that is so small that it may be legitimately ignored when making a decision. While ignoring small risks is common in our day-to-day decision making, attempts to introduce the notion of a de minimis risk into the framework of decision theory have run up against a series of well-known difficulties. In this paper, I will develop an enriched decision theoretic framework that is capable of overcoming two major (...) obstacles to the modelling of de minimis risk. The key move is to introduce, into decision theory, a non-probabilistic conception of risk known as normic risk. (shrink)

Questions of what a self-driving car ought to do if it encounters a situation analogous to the ‘trolley problem’ have dominated recent discussion of the ethics of self-driving cars. This paper argues that this interest is misplaced. If a trolley-style dilemma situation actually occurs, given the limits on what information will be available to the car, the dynamics of braking and tyre traction determine that, irrespective of outcome, it is always least risky for the car to brake in a straight (...) line rather than swerve. (shrink)

There are decision problems where the preferences that seem rational to many people cannot be accommodated within orthodox decision theory in the natural way. In response, a number of alternatives to the orthodoxy have been proposed. In this paper, I offer an argument against those alternatives and in favour of the orthodoxy. I focus on preferences that seem to encode sensitivity to risk. And I focus on the alternative to the orthodoxy proposed by Lara Buchak’s risk-weighted expected (...) utility theory. I will show that the orthodoxy can be made to accommodate all of the preferences that Buchak’s theory can accommodate. (shrink)

Artificial intelligence technology has been widely applied in many fields. AI-assisted learning environments have been implemented in classrooms to facilitate the innovation of pedagogical models. However, college students' willingness to accept AI-assisted learning environments has been ignored. Exploring the factors that influence college students' willingness to use AI can promote AI technology application in higher education. Based on the Unified Theory of Acceptance and Use of Technology and the theory of perceived risk, this study identified six factors (...) that influence students' willingness to use AI to analyze their relationships with WTA AI-assisted learning environments. A model including six hypotheses was constructed to test the factors affecting students' WTA. The results indicated that college students showed “weak rejection” of the construction of AI-assisted learning environments. Effort expectancy, performance expectancy, and social influence were all positively related to college students' WTA AI-assisted learning environments. Psychological risk significantly negatively influenced students' WTA. The findings of this study will be helpful for carrying out risk communication, which can promote the construction of AI-assisted learning environments. (shrink)

Ulrich Beck's best selling Risk Society established risk on the sociological agenda. It brought together a wide range of issues centering on environmental, health and personal risk, provided a rallying ground for researchers and activists in a variety of social movements and acted as a reference point for state and local policies in risk management. The Risk Society and Beyond charts the progress of Beck's ideas and traces their evolution. It demonstrates why the issues raised (...) by Beck reverberate widely throughout social theory and covers the new risks that Beck did not foresee, associated with the emergence of new technologies, genetic and cybernetic. The book is unique because it offers both an introduction to the main arguments in Risk Society and develops a range of critical discussions of aspects of this and other works of Beck. (shrink)

I propose a general alethic theory of epistemic risk according to which the riskiness of an agent’s credence function encodes her relative sensitivity to different types of graded error. After motivating and mathematically developing this approach, I show that the epistemic risk function is a scaled reflection of expected inaccuracy. This duality between risk and information enables us to explore the relationship between attitudes to epistemic risk, the choice of scoring rules in epistemic utility (...) class='Hi'>theory, and the selection of priors in Bayesian epistemology more generally. (shrink)

How can it be rational to work on a new theory that does not yet meet the standards for good or acceptable theories? If diversity of approaches is a condition for scientific progress, how can a scientific community achieve such progress when each member does what it is rational to do, namely work on the best theory? These two methodological problems, the problem of pursuit and the problem of diversity, can be solved by taking into account the cognitive (...) risk that is involved in theory choice. I compare this solution to other proposals, in particular T. S. Kuhn's and P. Kitcher's view that the two problems demonstrate the epistemic significance of the scientific community. (shrink)

This book argues that ideas about risk have not traditionally been absent from law, as is sometimes supposed.

In this paper, I examine the decision-theoretic status of risk attitudes. I start by providing evidence showing that the risk attitude concepts do not play a major role in the axiomatic analysis of the classic models of decision-making under risk. This can be interpreted as reflecting the neutrality of these models between the possible risk attitudes. My central claim, however, is that such neutrality needs to be qualified and the axiomatic relevance of risk attitudes needs (...) to be re-evaluated accordingly. Specifically, I highlight the importance of the conditional variation and the strengthening of risk attitudes, and I explain why they establish the axiomatic significance of the risk attitude concepts. I also present several questions for future research regarding the strengthening of risk attitudes. (shrink)

This paper has two goals. The first is to fill a gap in the literature on inductive risk by exploring the relevance of the notion of inductive risk to macroeconomics and monetary policy. The second goal is to draw some general lessons about inductive risk from the case discussed. The most important of these lessons is that the notion of inductive risk is no less relevant to the relationship between the proximate and distal goals of policy (...) than it is to the relationship between policies and their goals. (shrink)

In his paper, ‘Patients, doctors and risk attitudes’, Makins argues that doctors, when choosing a treatment for their patient, need to follow their risk profile.1 He presents a pair of fictitious diseases facing a patient who either has ‘exemplitis’, which requires no treatment or ‘caseopathy’, which is severe and disabling and for which there is a treatment with unpleasant side effects. The doctor needs to decide whether the patient should pursue the unpleasant treatment, just in case he has (...) caseopathy. Makins believes that rational-choice theory is a productive way to approach this problem. This theory frames all decisions as gambles. Each possible gamble (eg, not to pursue treatment) leads, probabilistically, to a set of outcomes (life with no disease and no side effects, but also, possibly, life with a disabling disease, since no treatment is taken). Utilities of these outcomes and probabilities that they will happen are combined to yield a number—expected utility. One is supposed to gamble—to make a choice—in a way that maximises this expected utility. Makins takes this framework for granted and is focused on an additional complication, the patient’s risk preference. He believes that, in his hypothetical example, even if expected utility were exactly the same, withholding treatment …. (shrink)

abstract Cowen and I agree that rational‐expectations theory is unrealistic and that risk is difficult to quantify. However, we continue to disagree about the riskiness of consumption as opposed to investment. Since more investment might lead to a recession if investment is relatively risky, Cowen's use of rational‐expectations theory to buttress the Austrian school's claim that market economies can shift toward relatively more investment without experiencing macroeconomic disruption remains suspect.

The paper re-expresses arguments against the normative validity of expected utility theory in Robin Pope (1983, 1991a, 1991b, 1985, 1995, 2000, 2001, 2005, 2006, 2007). These concern the neglect of the evolving stages of knowledge ahead (stages of what the future will bring). Such evolution is fundamental to an experience of risk, yet not consistently incorporated even in axiomatised temporal versions of expected utility. Its neglect entails a disregard of emotional and financial effects on well-being before a particular (...) risk is resolved. These arguments are complemented with an analysis of the essential uniqueness property in the context of temporal and atemporal expected utility theory and a proof of the absence of a limit property natural in an axiomatised approach to temporal expected utility theory. Problems of the time structure of risk are investigated in a simple temporal framework restricted to a subclass of temporal lotteries in the sense of David Kreps and Evan Porteus (1978). This subclass is narrow but wide enough to discuss basic issues. It will be shown that there are serious objections against the modification of expected utility theory axiomatised by Kreps and Porteus (1978, 1979). By contrast the umbrella theory proffered by Pope that she has now termed SKAT, the Stages of Knowledge Ahead Theory, offers an epistemically consistent framework within which to construct particular models to deal with particular decision situations. A model by Caplin and Leahy (2001) will also be discussed and contrasted with the modelling within SKAT (Pope, Leopold and Leitner 2007). (shrink)

This paper calls attention to some basic problems and inner contradictions in the German sociologist Ulrich Beck’s theory of the ‘(world) risk society’ or reflexive (second) modernity. A main thread in the critique is that of addressing the theoretical ambiguities that seem to characterize Beck’s at the same time ‘social constructivist’ and ‘realist’ notion of risk – ambiguities that seem to be repeated on the one hand in Beck’s view on the relation between knowledge and unawareness in (...) reflexive modernity and on the other hand in his view on the role of the mass media in the ‘(world) risk society’. Moreover, Beck’s notions of second modernity, reflexivity, rationality and critique are critically examined. With the alternative positions discussed in the paper – represented by Jeffrey C. Alexander, Niklas Luhmann and Mitchell Dean – some indications are given as to how one might fruitfully elaborate on the problem of risk. Thus, rather than a mainly technology-driven new type of social reality, the ‘(world) risk society’ could perhaps better be seen as indicating a changing cultural self-understanding of late modern society, a new ‘semantics of crisis', or the emergence of new forms of governmentality in the contemporary welfare state. In conclusion, some indications are given as to how an analysis of more specific ‘risk logics' or ‘rationalities' could be elaborated on, and a terminology that reflects this more differentiated approach to risk in late modern society is suggested. (shrink)

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This article argues that Lara Buchak’s risk-weighted expected utility (REU) theory fails to offer a true alternative to expected utility theory. Under commonly held assumptions about dynamic choice and the framing of decision problems, rational agents are guided by their attitudes to temporally extended courses of action. If so, REU theory makes approximately the same recommendations as expected utility theory. Being more permissive about dynamic choice or framing, however, undermines the theory’s claim to capturing (...) a steady choice disposition in the face of risk. I argue that this poses a challenge to alternatives to expected utility theory more generally. (shrink)

Lara Buchak sets out a new account of rational decision-making in the face of risk. She argues that the orthodox view is too narrow, and suggests an alternative, more permissive theory: one that allows individuals to pay attention to the worst-case or best-case scenario, and vindicates the ordinary decision-maker.

Are risk preferences stable over time? To address this question we elicit risk preferences from the same pool of subjects at two different moments in time. To interpret the results, we use a Fechner stochastic choice model in which the revealed preference of individuals is governed by some underlying preference, together with a random error. We take cumulative prospect theory as the underlying preference model (Kahneman and Tversky, Econometrica 47:263–292, 1979; Tversky and Kahneman, Journal of Risk (...) and Uncertainty 5:297–323, 1992). We observe that the aggregate pattern of preferences is very similar in both sessions, and it matches the results reported in the literature. Most subjects are risk averse for gains, and risk seeking for losses. However, the subjects that jointly agree with the reflection effect of prospect theory are around 50%. The percentage of individuals that change their responses across sessions is quite high, 63%. Estimating the stochastic choice model we find that 72% of the subjects have an underlying preference which agrees with the reflection effect of prospect theory. The remaining 28% are mainly classified as risk averse for both gains and losses. The results reinforce the empirical validity of the reflection effect. Deviations from the reflection effect can be attributed to noise, as well as to the existence of a fraction of risk averse subjects. (shrink)

An assurance theory of trust begins from the act of assurance – whether testimonial, advisorial or promissory – and explains trust as a cognate stance of resting assured. My version emphasizes the risks and rewards of trust. On trust’s rewards, I show how an assurance can give a reason to the addressee through a twofold exercise of ‘normative powers’: (i) the speaker thereby incurs an obligation to be sincere; (ii) if the speaker is trustworthy, she thereby gives her addressee (...) the reason. Each claim is controversial; my contribution lies in how I defend them together, linking the sincerity obligation to the provision of reasons. On trust’s risks, I defend a popular thesis about the nature of trust – that trust differs from mere reliance in how it risks betrayal – against the objection that the thesis ‘moralizes’ trust. Such betrayal need not be moral, I argue, because it may derive entirely from how the assurance purports to provide a reason. (shrink)

SummaryI contend on both theoretical and historical grounds that quantitative risk assessment is relevant for policy determination only as a cost estimate. In particular, it provides a method for estimating the costs of a hypothetical insurance policy against the potential liabilities associated with a given course of action. It is not relevant to the question of rational choice under risk.RésuméJe montre, en partant d'arguments aussi bien théoriques qu'historiques, que le calcul quanti‐tatif des risques n'aide à la détermination d'une (...) politique à suivre qu'en tant qu'estimation des coûts. En particulier, il fournit une méthode pour estimer les primes d'une police hypothétique d'assurance contre les responsabilites potentielles associées à une suite donnée d'actions. 11 ne permet pas un choix rationnel dans des situations comportant des risques.ZusammenfassungIch argumentiere, sowohl aus theoretischen als auch aus historischen Gründen, dass eine quantitative Risikoberechnung für die Wahl einer Handlungsweise nur als Kostenschätzung relevant ist. Namentlich bietet sie eine Methode, um die Prämie einer Versicherungspolice gegen pot‐entielle Haftbarkeit, welche mit den Vorgängen eines Aktionsverlaufs verbunden ist, zu bestim‐men. Bei der Frage einer rationalen Wahl in einer Risikosituation ist sie nicht relevant. (shrink)

Nurses practising in mental health are faced with challenging decisions concerning confidentiality if a patient is deemed a potential risk to self or others, because releasing pertinent information pertaining to the patient may be necessary to circumvent harm. However, decisions to withhold or disclose confidential information that are inappropriately made may lead to adverse outcomes for stakeholders, including nurses and their patients. Nonetheless, there is a dearth of contemporary research literature to advise nurses in these circumstances. Cognitive Continuum (...) class='Hi'>Theory presents a single‐system intuitive‐analytical approach to examining and understanding nurse cognition, analogous to the recommended single‐system approach to decision‐making in mental health known as structured clinical judgement. Both approaches incorporate cognitive poles of wholly intuition and analysis and a dynamic continuum characterised by a ‘common sense’ blending of intuitive and analytical cognition, whereby cues presented to a decision‐maker for judgement tasks are weighed and assessed for relevance. Furthermore, Cognitive Continuum Theory promotes the importance of determining pattern recognition and functional relations strategies, which can be used to understand the operationalisation of nurse cognition. (shrink)

David McCarthy has recently suggested that our compensation and liability practices may be interpreted as reflecting a fundamental norm to hold people liable for imposing risk of harm on others. Independently, closely related ideas have been criticised by Stephen R. Perry and Arthur Ripstein as incompatible with central features of negligence law. We aim to show that these objections are unsuccessful against McCarthy’s Risk–liability theory, and that such an approach is a promising means both for understanding the (...) moral basis of liability for negligence and for reasoning about possible reforms of the institution of negligence law. (shrink)

The rash of high-profile accounting frauds involving internal corporate accountants calls into question the individual accountant’s perceptions of the ethical climate within their organization and the limits to which these professionals will tolerate unethical behavior and/or accept it as the norm. This study uses social cognitive theory to examine the antecedents of individual corporate accountant’s perceived personal fit with their organization’s ethical climate and empirically tests how these factors impact organizational attitudes. A survey was completed by 203 corporate accountants (...) to assess their perception of relevant variables. The results of the structural equation model indicate three significant antecedents relating to ethical climate fit: higher internal levels of locus of control; greater numbers of prior job changes; and higher perceptions of an increasingly better fit with the firm’s ethical climate. Our results also indicate that higher levels of perceived fit to the ethical climate of a firm are associated with higher levels of perceived job satisfaction and organizational commitment. We also theorize that perceptions of an organization’s ethical climate may be reflections of client narcissism and serve a potential indicator of fraud risk. This is an important topic of study, since current auditing standards call for auditors to examine organizational attitudes toward fraud, but offer minimal guidance in doing so. (shrink)

With the increase in depth of coal mining, the hydrogeological complexity largely increases and water inrush accidents happen more frequently. For the safety of coal mining, horizontal directional drilling and grouting techniques have been implemented to detect and plug the fractures and conduits that deliver high-pressure groundwater to coal mine. Taking the grouting engineering performed at Xingdong coal mine at 980 m below sea level as an example, we collected the data of grouting quantity, the loss of drilling fluid, gamma (...) value, water temperature, average water absorption, distance between grouting loss points, water pressure on coal seam floor, and aquifuge thickness at 90 boreholes in the mine to conduct grey relational analysis, first. The analysis showed that the grouting quantity was highly correlated with all other factors. Subsequently, grey system evaluation was used to evaluate the risk of water inrush from the coal seam floor. The results of risk analysis illustrated that three water inrushes from Ordovician limestone occurred in mining face 2127, 2125, and 2222 in the study area were all located in the area with a risk score higher than 65. Through grouting, the identified cracks were effectively blocked and waterproof layers beneath the coal seam floors were constructed to reduce the threat of water inrush. By comparing the risk assessment results with three water inrush cases before grouting operation, we found that water inrush areas were consistent with the area of higher risk. (shrink)

No existing normative decision theory adequately handles risk. Expected Utility Theory is overly restrictive in prohibiting a range of reasonable preferences. And theories designed to accommodate such preferences (for example, Buchak's (2013) Risk‐Weighted Expected Utility Theory) violate the Betweenness axiom, which requires that you are indifferent to randomizing over two options between which you are already indifferent. Betweenness has been overlooked by philosophers, and we argue that it is a compelling normative constraint. Furthermore, neither Expected (...) nor Risk‐Weighted Expected Utility Theory allow for stakes‐sensitive risk‐attitudes—they require that risk matters in the same way whether you are gambling for loose change or millions of dollars. We provide a novel normative interpretation of Weighted‐Linear Utility Theory that solves all of these problems. (shrink)

As software piracy continues to be a threat to the growth of national and global economies, understanding why people continue to use pirated software and learning how to discourage the use of pirated software are urgent and important issues. In addition to applying the theory of planned behavior (TPB) perspective to capture behavioral intention to use pirated software, this paper considers perceived risk as a salient belief influencing attitude and intention toward using pirated software. Four perceived risk (...) components related to the use of pirated software (performance, social, prosecution and psychological risks) have been identified, measured and tested. Data were collected through an online survey of 305 participants. The results indicate that perceived prosecution risk has an impact on intention to use pirated software, and perceived psychological risk is a strong predictor of attitude toward using pirated software. In addition, attitude and perceived behavior control contribute significantly to the intended use of pirated software. However, the proposed direct relationship between subjective norm and intention to use pirated software is not supported. Implications for research and practice are discussed. (shrink)

This special issue brings together contributions from nine scholars who have been working at the frontiers of the comparative study of risk. Most of the papers that follow use a cross-national approach to investigate public attitudes to risk in a broad range of settings including Germany, Sweden, Denmark, England, and the United States. Two of the authors represented here adopt more creative interpretations for carrying out comparative studies that reach considerably beyond conventional methodologies of country-level contrasts. One contributor (...) highlights the temporal dimensions of novel forms of environmental uncertainty and a second selection, grounded in the sociology of language, compares the different objectives that lay people seek to satisfy when they speak about risk. In this sense, this issue provides a farrago of perspectives on the most befitting way to exploit the utility of comparative methodologies.Political scientists interested in the effects of different regulatory regimes and systems of governance have been responsible for most comparative risk research conducted to date. The papers in this issue depart from this tradition and instead draw on insights derived from social theory. There has been over the past decade a dramatic upswelling of interest in risk among theoretically-inclined sociologists and several writers have suggested that a pervasive sense of anxiety is a central feature of the current phase of modernity (e.g., Giddens, 1990; Beck, 1992). This collection represents an initial attempt to situate these recondite impressions in distinct contexts and to scrutinise them from a variety of comparative perspectives. (shrink)

The ‘death of evidence’ issue in Canada raises the spectre of politicized science, and thus the question of what role social values may have in science and how this meshes with objectivity and evidence. I first criticize philosophical accounts that have to separate different steps of research to restrict the influence of social and other non-epistemic values. A prominent account that social values may play a role even in the context of theory acceptance is the argument from inductive (...) class='Hi'>risk. It maintains that the more severe the social consequences of erroneously accepting a theory would be, the more evidence is needed before the theory may be accepted. However, an implication of this position is that increasing evidence makes the impact of social values converge to zero; and I argue for a stronger role for social values. On this position, social values may determine a theory’s conditions of adequacy, which among other things can include co.. (shrink)

I have claimed that risk-weighted expected utility maximizers are rational, and that their preferences cannot be captured by expected utility theory. Richard Pettigrew and Rachael Briggs have recently challenged these claims. Both authors argue that only EU-maximizers are rational. In addition, Pettigrew argues that the preferences of REU-maximizers can indeed be captured by EU theory, and Briggs argues that REU-maximizers lose a valuable tool for simplifying their decision problems. I hold that their arguments do not succeed and (...) that my original claims still stand. However, their arguments do highlight some costs of REU theory. (shrink)

The Colombian Civil Code regulates the theory of risk in the contractual relationships that arise from the sale. The buyer is not the owner and bears the fortuitous loss of the thing, having to execute the payment provision knowing that the debtor will not meet theirs, in a situation that threatens the contractual balance of act. The theory is taken from French law, George Ripert (n. d) and adopted by the Colombian law. It is proposed that the (...) cause of the contract, element of formation, and execution of the act is accepted in order to restrict the threat that puts the legal stability of the act at risk. (shrink)

This paper addresses three questions central to the ethical analysis of risks and potential benefits in human subjects research: 1. How was the ethical analysis of risk understood by the members of the U.S. National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research (National Commission)? 2. What conceptual framework should guide the ethical analysis of risk? 3. What changes to U.S. regulations would the implementation of such a framework require?

Stable adaptive strategy of Homo sapiens (SESH) is a superposition of three different adaptive data arrays: biological, socio-cultural and technological modules, based on three independent processes of generation and replication of an adaptive information – genetic, socio-cultural and symbolic transmissions (inheritance). Third component SESH focused equally to the adaptive transformation of the environment and carrier of SESH. With the advent of High Hume technology, risk has reached the existential significance level. The existential level of technical risk is, by (...) definition, an evolutionary risk as possible leads to the genesis of disappearance of humanity as a species. The emergence of bioethics has to consider as a form of modern (transdisciplinary) scientific concept and sociocultural adaptation for regulate human identity in the global-evolutionary transformation and performs the function of self-preservation. (shrink)