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This article demonstrates a methodology that allows individuals to reach a personal decision on the use of products which carry very small risks to health and life but also offer considerable benefits. A combination of the principles of dominance, extended dominance, and various methods of direct risk–benefit tradeoffs are shown to reduce the number of possible decisions regarding product use to the one optimal for the value structure of a particular individual. An historical examination of toxic‐shock syndrome identifies tampons as a product with risks too small to warrant public intervention but too sizeable to be ignored. The methodology described here can be applied for all such products.

Abstract:Institutions influence and shape behaviour. This paper suggests one way in which they do so that has been largely overlooked in institutional analysis and design. When faced with a decision or problem, people have more than one mechanism at their disposition for addressing it. The human mind offers multiple tools, ranging from conscious deliberation to spontaneous, affective reactions. Relying on technology or experts, decision-makers can also muster additional resources. Often, the meta-choice of which decision-making or problem-solving mode is used has an impact on the output. Some normative goals are more likely met if the decision-maker uses a specific problem-solving mode. We argue that the meta-choice of which problem-solving mode to use for a given decision can be influenced by institutions. In the interest of defining access points for institutions, we develop a conceptual framework for the selection and implementation of decision-making and problem-solving modes.

This study of 29 MBA students compares two models of risk perception for both financial and health risk stimuli. The first, inspired by Luce and Weber's Conjoint Expected Risk (CER) model, uses five dimensions: probability of gain, loss and status quo, and expected benefit and harm. The second, inspired by the Sovic et al. psychometric model, employs seven dimensions: voluntariness, dread, control, knowledge, catastrophic potential, novelty, and equity. The CER‐type model provided a better fit for most subjects and stimuli. Adding the psychological risk dimensions from the Slovic et al. model explained only modestly more variance. Relationships between the dimensions of the two models are described and the construction of a hybrid model explored.