Risk strategy under task complexity: a multivariate analysis of behaviour in a naturalistic setting

Abstract

This study complements the existing literature on decision-making processes and outcomes in complex settings by exploring the impact of different types of complexity on risk strategies in a naturalistic setting. The study analyses a large sample of decisions made by individuals in UK offcourse betting markets, a fertile environment for observing both a variety of risk strategies and a range of task complexities. Specifically, the investigation focuses on the comparative impacts of complexity defined in terms, respectively, of alternatives and attributes. The results suggest that the risk strategy employed is affected by task complexity. Complexity does not affect the size of risk accepted but alternative- and attribute-based complexity together influence the propensity to accept greater degrees of risk. In addition, the effect of attribute-based complexity on risk taking appears to be modified by the use of risk-hedging strategies. The results are observed to corroborate some earlier work on decision process and outcome; where differences with earlier findings are identified, some possible explanations are offered.