The influence of incentive motivation and risk tolerance on risky decisions

Abstract

Risky decisions lead to cognitive-emotional stress because they depend on personal advantages and disadvantages. Assuming that incentive motivation, which is presumably determined by self-interest, and risk tolerance influence risky decisions, we expect that individuals would react differently. The Reinforcement-Sensitivity-Theory (RST) including the Behavioral-Approach-System (BAS) and the Behavioral-Inhibition-System (BIS) seemed to be the most suitable personality theory for this research. Three online surveys with 173, 232 and 299 participants (PN) were conducted in order to identify direct effects from the independent constructs as well as indirect effects by mediators such as current self-control power and self-assessment in view of managing risks. The hypothesis was tested by Structural Equation Modeling (SEM) based on data from the last two studies, and it was confirmed in both studies. More specific, the latent factors incentive motivation (or BAS) and risk tolerance (or BIS), including their predictors, indicated direct influences on risky decisions. Besides, impulsivity as a personality sub-factor should no longer belong to the BAS, but instead to the BIS as BIS (-). Furthermore, incentive motivation and risk tolerance showed reliable interactive effects only as latent factors. Mediator variables between self-interest and risky decision making showed indirect effects, too, e.g. loss of self-control power or disregarding the self-concept. Finally, the RST gets new impulses from this research model by the new latent factor risk-assessment in the SEM, which is responsible for coordinating and controlling the activities from the BIS and the BAS.