Risk perception in a simulated industrial purchasing task: The Effects of single versus multi‐play decisions

Abstract

AbstractAn experiment was conducted to test hypotheses concerning the impact of single‐play versus multiple‐play decisions made under risk in a simulated industrial purchasing setting. Results revealed that when a decision had multiple plays (e.g., purchase 100 personal computers), decision makers combined probabilities and outcomes to form their risk perceptions in a manner consistent with a multiplicative information integration model. In contrast, when a decision had a single trial (e.g., purchase one large mainframe computer), information was combined in a manner consistent with a non‐multiplicative integration pattern. In addition, when multiple trials of the decision occurred, subjects perceived lower risk than if the decision had a single play, even though the expected values of the decisions were the same. The results were discussed in terms of their relation to the use of expected value analysis as a decision‐making tool and in terms of their implications for industrial and consumer buying behavior.