Risky Shift Phenomena and Its Influence on Consumer Behavior
1. EXECUTIVE SUMMARY
Unfortunately, a lot of the psychological literature on this particular topic was written in the 1960’s/1970’s when the term Risky Shift was most popular. With more current research, the term Risky Shift has been replaced with the term Group Polarisation. (Deegs 2009:1)
The term Risky Shift was first coined in in the early 1960’s and was used to describe the tendency for groups to take more risks than the same individuals within these groups would have taken had they been faced with the same problem alone. There were inconsistencies with early studies however, which lead some researchers to introduce the term ‘stingy shift’ which was basically the same as a risky shift in that the group would tend to agree on the decision, however in this case, the decision was to be more conservative, or stingy. This idea seems to correlate quite well with the basic principles of groupthink, which is "a mode of thinking that people engage in when they are deeply involved in a cohesive group, when the members' strivings for unanimity override their motivation to realistically appraise alternative courses of action“ (Baumeister & Bushman, 2008)
Group Polarization can occur anywhere, anytime and anyone can do it. Occasions in the army where Group Polarization occurs is called incestuous amplification, whereby an individual will only listen to people with like beliefs, which in turn can lead to miscalculations and errors in judgement. (Wordspy 2011)
Organisations can use or abuse the risky shift phenomena to increase sales and brand awareness, it is therefore a very powerful and strategic tool to be used in obtaining certain desired states or organisations’ goals and objectives.
The risky shift phenomena (and the behaviour of consumers that goes with it) can effectively be used by organisations to create competition from economies of scale to monopoly. It therefore adds value as a valuable tool to obtain competitive sustainable advantage. 2. RISKY
Unfortunately, a lot of the psychological literature on this particular topic was written in the 1960’s/1970’s when the term Risky Shift was most popular. With more current research, the term Risky Shift has been replaced with the term Group Polarisation. (Deegs 2009:1)
The term Risky Shift was first coined in in the early 1960’s and was used to describe the tendency for groups to take more risks than the same individuals within these groups would have taken had they been faced with the same problem alone. There were inconsistencies with early studies however, which lead some researchers to introduce the term ‘stingy shift’ which was basically the same as a risky shift in that the group would tend to agree on the decision, however in this case, the decision was to be more conservative, or stingy. This idea seems to correlate quite well with the basic principles of groupthink, which is "a mode of thinking that people engage in when they are deeply involved in a cohesive group, when the members' strivings for unanimity override their motivation to realistically appraise alternative courses of action“ (Baumeister & Bushman, 2008)
Group Polarization can occur anywhere, anytime and anyone can do it. Occasions in the army where Group Polarization occurs is called incestuous amplification, whereby an individual will only listen to people with like beliefs, which in turn can lead to miscalculations and errors in judgement. (Wordspy 2011)
Organisations can use or abuse the risky shift phenomena to increase sales and brand awareness, it is therefore a very powerful and strategic tool to be used in obtaining certain desired states or organisations’ goals and objectives.
The risky shift phenomena (and the behaviour of consumers that goes with it) can effectively be used by organisations to create competition from economies of scale to monopoly. It therefore adds value as a valuable tool to obtain competitive sustainable advantage. 2. RISKY
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