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Do personal values explain variation in satisficing measures of risk?

Kavitha Ranganathan (T A Pai Management Institute, Manipal, India)

Management Decision

ISSN: 0025-1747

Article publication date: 8 June 2021

Issue publication date: 17 August 2021




The role of personal value systems as antecedents to risk has been largely ignored. Following Gigerenzer's view of ecological rationality, the authors argue an individual's personal value system serves as concrete motivations that guide risky choices and facilitate adaptation to one's environment.


The authors elicit risk attitudes using a satisficing-based risk elicitation method that exploits the idea of worst-case aspiration or minimum portfolio returns given a portfolio comprising a safe and risky prospect. The elicited worst-case aspiration allows for more descriptive and natural ways of characterizing attitudes to risk (i.e. satisficing measures of risk). Using the Schwartz Value Survey, the authors assess the relative importance individuals place on value systems, such as personal focus versus social focus. The authors argue that preference to value systems has linkages with the worst-case aspiration setting emphasized in the satisficing task.


This study’s findings suggest that individuals who are willing to give up higher potential returns to protect their downside risk (by setting higher worst-case aspiration) are positively associated with personal focus—concern about own outcomes than social focus—concern about the outcomes for others or established institutions.

Research limitations/implications

Currently, the study’s setting is in the domain of financial decision-making. Going forward, milestones could be set for studying risky real-world choices by simply changing the risk measure in different contexts, such as job choices, education, health and social interactions.


This study contributes to the discussion on the psychometric structure of risk. Prescriptive benefits of satisficing as a positive heuristic, which is interpreted as setting achievable goals or aspiration levels, are extensive and recognized in various industries ranging from agriculture, airlines, insurance to financial advising. More recently, cognitive processes, such as emotions and personal value systems, are recognized as a type of social cognition that subserve heuristic functions that can guide behavior quickly and accurately.



The author thanks Srinivasan R for research assistance. The author thanks the National Institute of Securities Market for investor data and acknowledges research support by the TA Pai Management Institute.


Ranganathan, K. (2021), "Do personal values explain variation in satisficing measures of risk?", Management Decision, Vol. 59 No. 7, pp. 1642-1663.



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