Reducing modest risks: Valuation or disposition?

Abstract

It is not fully understood why people pay to reduce modest risks, such as breakdowns of consumer goods. They may do so because they calculate expected valuations, or because they are predisposed to reduce risks. We use a computational model of decision making, the drift diffusion model, to study whether risk-reduction choices are valuational or dispositional. Across two studies (one preregistered, total N = 205, arranged in 2022 and 2023), we find that an explicit insurance framing is associated with more consistent choices and higher responsiveness to changes in insurance contract parameters than an implicit lottery framing. Computational modeling suggests that subjects accumulate evidence toward the reduced-risk option faster under time pressure. However, the prevaluation bias in the evidence accumulation process does not significantly differ between framings, pointing toward the absence of an insurance-related predisposition. Additional analysis using response dynamics supports our findings, showing that option evaluation tends to be more biased toward risk reduction under explicit insurance framing and time pressure. Although the effect sizes are modest, our results provide suggestive evidence of how presenting risk-reducing choices as insurance and making these choices under time-pressure biases the comparison and evaluation of options toward risk reduction. (PsycInfo Database Record (c) 2026 APA, all rights reserved).