A key conclusion from the Campbell Institute is that campaigns and programs aimed at reducing risky behaviour should attempt to target all levels , from macro- to the individual micro-level.
16 Theories of risk perception and tolerance – Protection Motivation Theory: Being motivated to protect oneself requires the perception of risk and an expectation that you can consciously take successful preventive action. – Risk Compensation Theory: People tend to take more risks when they feel more secure – Situated Rationality Theory: If the perceived reward for risk taking is high enough then it is “rational” from the individual’s point of view to take the risk particularly if knowledgeable about the risk – Habituated Action Theory: Those who repeatedly perform a high risk activity without adverse consequences may become desensitised to the risk – Social Action Theory: People take/avoid risks because of peer pressure or community perception that an activity is low/high risk – Social Control Theory: A feeling of connectedness to organizations promotes behavior conformity, which can reduce the probability of high-risk behavior
17 Classifying behavioural theories by risk factors Factor level Behavioural theory Rationale Macro Societal Action Theory Societal Control Theory Impetus for a person to take risks comes from a larger societal force Meso Situated Rationality Theory Personal decision making after considering all circumstances Micro Protection Motivation Theory Risk Compensation Theory Habituated Action theory Individual level behavioural motivation
18 Can you see how Protection Motivation Theory often underpins An example of changing risky behaviour
19 For fraud to occur, the “Fraud Diamond Theory” states that a person must have: 1. Incentive - Perceived reward 2. Capability and Opportunity - Knowledge and skill 3. Rationalisation - Rational behaviour from the perpetrator's perspective We can see that is very similar to Situated Rationality Theory - it is a rational act in the mind of the perpetrator. The Diamond suggests we must also reduce opportunity and decrease any excessive incentive schemes. An example of internal fraud explained by behavioural theory
Perception biases and heuristics
21 Background In this section we consider the common theories of biases humans have when judging the likelihood and severity of risks. Reading: Psychological Aspects of Decisionmaking
22 Heuristics ▪ A heuristic is defined as any approach to problem solving that employs a practical method, not guaranteed to be optimal or perfect , but sufficient for immediate goals ▪ Heuristics can be mental shortcuts that ease the cognitive load of making a decision ▪ It describes how people make decisions, come to judgments, and solve problems typically when facing complex problems or incomplete information ▪ These rules work well under most circumstances, but in certain cases lead to systematic errors or cognitive biases ▪ It is therefore important that we be aware of when heuristic biases may be at work
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