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The Differential Effects of Fear and Tranquility on Risk Taking When Probabilistic Information is Communicated in Verbal Terms

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Abstract

Verbal probability expressions are often used to communicate risk in decision making situations. We tested the argument that fear would lead to more pessimistic risk perceptions and higher risk aversion than tranquility when the verbal probability expression used to communicate risk is more (vs. less) ambiguous. In Experiment 1, using a dispute resolution context, we found that fear led to a lower impasse rate than tranquility when the probability of winning in court was described using the ambiguous probability word ‘a chance’ than when less ambiguous probability words were used (i.e., doubtful, probable). In Experiment 2, we replicated this effect using a risky-choice task. Participants in the fear condition were more likely to choose the safe option than those in the tranquil emotion condition when risk was communicated using the ambiguous probability word ‘a chance’ (vs. ‘doubtful’ and ‘probable’). The implications of these findings for emotion, risk taking, and risk communication literatures are discussed.

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Notes

  1. The chat system was set up to end the negotiations when the time expired, however all negotiations ended before the 15-min time limit, when parties formally declared an agreement or impasse.

  2. Cohen (1988) suggested that d = .2 be considered a 'small' effect size, .5 represents a ‘medium’ effect size and .8 a ‘large’ effect size.

  3. We did not predict this significant difference between the two emotion conditions. We identified two outliers in the fearful-doubtful condition that may account for this difference (note. these are the same outliers mentioned under ‘ambiguity of verbal probability expression.’) Specifically, two participants in this condition rated their probability of winning in court as 1.00. When these outliers were eliminated, the mean numerical probability estimate in this condition dropped to .39, (SD = .16) and the difference in subjective probability estimates between the fear and tranquil emotion conditions became marginally significant, t(32) = 1.84, p = .075, d = .63.

  4. We replicated this effect using a logistic regression analysis with 5000 bootstrap samples (PROCESS Model 1; Hayes 2018). The interaction effect of emotion and verbal probability expression on risk taking was significant (B = 1.12, S. E. = .56, p = .045). As predicted, only in the condition ‘a chance,’ fear (vs. tranquility) led to lower risk taking, B = − 1.58, S.E = .74, p = .03, 95% CI = [− 3.03, − .12]. In the other verbal probability conditions, the effect of emotion on risk taking was not significant (p > .30).

  5. We replicated this effect using a logistic regression analysis with 5000 bootstrap samples (PROCESS Model 1; Hayes 2018). The interaction effect of emotion and verbal probability expression on risk taking was not significant (B = − .07, S. E. = .51, p = .89).

  6. We also measured participants of perceptions of predictability and situational control (Lerner and Keltner 2001) as well as their approach and avoidance motivation (Elliot and Thrash 2002). We did not find a significant interaction effect of the emotion and verbal probability expression conditions on these variables. These results were not reported in the manuscript but are available upon request.

  7. We also transformed the risk perceptions measure in order to obtain a normal distribution. The direction and significance of the results were the same using the transformed variable.

  8. We replicated this effect using a logistic regression analysis with 5000 bootstrap samples (PROCESS Model 1; Hayes 2018). The interaction effect of emotion and verbal probability expression on risk taking was significant (B = .78, S. E. = .32, p = .013). As predicted, only in the condition ‘a chance,’ fear (vs. tranquility) led to lower risk taking, B = − 1.00, S.E = .42, p = .016, 95% CI = [− 1.82, − .10]. In the other verbal probability conditions, the effect of emotion on risk taking was not significant (p > .14).

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Acknowledgements

This project was supported in part by a Webster University Faculty Research Grant awarded to the first author.

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Authors and Affiliations

  1. George Herbert School of Management and Technology, Webster University, 470 E Lockwood Avenue, Webster Groves, MO, 63119, USA

    Ece Tuncel

  2. John M. Olin School of Business, Washington University in St. Louis, 1 Brookings Drive, St. Louis, MO, 63130, USA

    William P. Bottom

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  1. Ece Tuncel
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  2. William P. Bottom
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Appendix

Appendix

1.1 Experiment 1: Task Instructions

1.1.1 Plaintiff Role

Imagine that you live in an apartment building and park your car in the indoor parking garage. Last week, as you were leaving home to drive to school, you saw that a big piece of drywall fell onto your car from the ceiling, breaking the rear taillight and scratching the trunk. That afternoon, you took your car to a garage and learned that the cost of damages was $1200. Since your insurance deductible is higher than this amount, you would have to pay for the full amount to get your car fixed.

You let the apartment manager know about the situation and asked for a reimbursement since it is the management’s responsibility to keep the garage safe for parking. The manager told you that the ceiling should be inspected before any payment decision could be made. A couple of days later, the manager called you to tell that the inspectors could not detect any structural problem or a water leak in the ceiling. However, they saw a raccoon’s footprints around your parking spot. They believe that a raccoon went into the ceiling, leading the drywall to fall. The manager added that they will NOT pay for the damages since the situation did not result from an oversight on their part such as a water leak. The manager said ‘We simply could not have prevented the raccoon from getting into the ceiling’.

After talking to the manager, you went to Student Legal Services to talk about possible courses of action. The lawyer told you that there are two options in this situation:

  • REACHING A SETTLEMENT: You can talk with the apartment manager again and negotiate to receive a certain amount of money to cover your expenses.

  • GOING TO THE SMALL CLAIMS COURT: If you cannot reach a satisfactory deal with the manager, you can go to court. The small claims court helps people handle their small cases without an attorney. To file your case, you need to pay a $100 court fee. There are no additional fees or legal costs involved. If the judge decides in your favor, you will receive the amount you asked for. If not, you will receive $0.

You asked the lawyer about your chances of winning in court and the lawyer replied “it is doubtful/there is a chance/it is probable that the judge will make a decision in your favor.” (Note: Participants were randomly assigned to one of the three verbal probability expression conditions.)

After giving some thought to the matter, you decided to negotiate with the manager. If you cannot get a satisfactory deal in the negotiation, you will consider going to court.

You are about to negotiate with the manager. You have 15 min to negotiate. The negotiation will end when one of the following occurs:

  • You REACH AN AGREEMENT with the manager.

  • TIME RUNS OUT before you reach an agreement.

  • One of you decides to END THE NEGOTIATION AND PRESSES THE EXIT BUTTON.

(Note: Then participants negotiated with their counterpart, sending offers and messages. In each round, they had the option to (1) send an offer, (2) reach an agreement, or (3) terminate the negotiation which meant reaching impasse.)

1.1.2 Defendant Role

Imagine that you manage an apartment complex in which most of the occupants are college students. The building also has an indoor garage. Last week, a tenant called you to tell that a big piece of drywall fell from the ceiling onto the tenant’s car, breaking the rear taillight and scratching the trunk. The cost of damages was $1200. The tenant asked you to pay for the damages, arguing that it is the management’s responsibility to keep the garage safe for parking. You told the tenant that the ceiling should be inspected before any payment decision could be made.

The inspectors came to the garage a couple of days later. They could not detect any structural problem or a water leak in the ceiling. However, they saw a raccoon’s footprints around the tenant’s parking spot. They believe that a raccoon went into the ceiling, leading the drywall to fall. Since the situation did not result from an oversight on your part such as a water leak, you decided NOT to pay for the damages. You simply could not have prevented the raccoon from getting into the ceiling. A couple of days later, you conveyed this decision to the tenant.

In any case, you talked to a lawyer to ask about the possible courses of action the tenant can take in this situation. The lawyer told you that the tenant has two options in this situation:

  • REACHING A SETTLEMENT: The tenant could try to negotiate with you to receive a certain amount of money to cover the expenses.

  • GOING TO THE SMALL CLAIMS COURT: The tenant could go to the small claims court. The small claims court helps people handle their small cases without an attorney. To apply, the tenant needs to pay a $100 court fee. There are no additional fees or legal expenses involved. If the judge decides in the tenant’s favor, you will pay the amount the tenant asked for. If not, you will pay nothing.

You asked the lawyer about the tenant’s chances of winning in court and the lawyer replied “it is doubtful/there is a chance/it is probable that the judge will make a decision in the tenant’s favor.” (Note: Participants were randomly assigned to one of the three verbal probability expression conditions.)

After a couple of days, you learned that the tenant decided to talk to you again and negotiate. If you cannot reach a satisfactory deal in the negotiation, the tenant will consider going to court.

You are about to negotiate with the tenant. You have 15 min to negotiate. The negotiation will end when one of the following occurs:

  • You REACH AN AGREEMENT with the tenant.

  • TIME RUNS OUT before you reach an agreement.

  • One of you decides to END THE NEGOTIATION AND PRESSES THE EXIT BUTTON.

(Note: Then participants negotiated with their counterpart, sending offers and messages. In each round, they had the option to (1) send an offer, (2) reach an agreement, or (3) terminate the negotiation which meant reaching impasse.)

1.2 Experiment 2: Task Instructions

You will make a choice and you have two options: Option A and Option B.

If you choose Option A: You can win $10.

If you choose Option B: Your counterpart will make the decision. If your counterpart makes a decision in your favor, you will win $20. If your counterpart does not make a decision in your favor, you will receive $0.

There is a chance/it is probable/it is doubtful that your counterpart will make a decision in your favor. (Note: Participants were randomly assigned to one of the three verbal probability expression conditions.)

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Tuncel, E., Bottom, W.P. The Differential Effects of Fear and Tranquility on Risk Taking When Probabilistic Information is Communicated in Verbal Terms. Group Decis Negot 28, 671–693 (2019). https://doi.org/10.1007/s10726-019-09628-3

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