Measuring Risk Tolerance across Domains: Scale Development and Validation

Abstract

Risk attitudes are of interest to researchers in many fields as they play a crucial role in our day-to-day decision-making. In this paper we develop a measure of risk attitudes-the Multi-Domain Risk Tolerance (MDRT) scale-that addresses some key shortcomings of popular self-report scales, such as the Domain-Specific Risk-Taking (DOSPERT) scale. We do this by clearly aligning the risk in the items with the particular domain of risk, reducing item ambiguity, and reducing the impact of prior knowledge. We developed the MDRT using an Exploratory Graph Analysis (EGA) and Item Response Theory (IRT) approach with a community sample (N = 921). We examined its construct and convergent validity (N = 493) and construct generalizability (N = 487). We found that the MDRT had excellent internal consistency, dimensionality and latent factor structure. The MDRT also demonstrated significant convergent validity with related scales used in the literature. The MDRT is shown to be a promising alternative measure of risk attitudes. Show more