An analysis of risky shift experiments

The Wallach-Kogan choice dilemma instrument used in most experiments on group risk taking has twelve questions. Each question has a status quo or sure thing with a utility U0 and a risky alternative which, if successful, yields a utility of U1 and if unsuccessful, a disutility of −U2. Allowing for possible utilities for gambling or risk-taking and caution, one can form an expected utility function for taking the risky alternative. The subjects' task of determining the minimum probability for accepting the risky alternative is the solution of the utility function for p. This solution and its changes in value have infinitely many possible explanations. The concept of risk used in these experiments is shown to be questionable. An extensive analysis of current explanations of risky shift demonstrates that these explanations are not testable using the Wallach-Kogan questionnaire. Several suggestions are made to reformulate the research problem.