Vlaev, I., Chater, N., & Stewart, N. (2009). Dimensionality of risk perception: Factors affecting consumer understanding and evaluation of financial risk. Journal of Behavioral Finance, 10, 158-181.

This article describes two studies of the factors affecting consumer understanding of financial risk. The first study investigated factors affecting peoples perception and comprehension of information about the risks related to retirement investments. First, we asked the respondents to list possible risk factors related to investment in a pension plan. Then, we obtained ratings of different factors (like the perceived level of knowledge about an investment), which could affect perception of the risk of financial products and retirement investment decisions. Finally, we asked the subjects to rate eleven different descriptions presenting risk information about the same financial product. The risk information framing that received highest rating presented risk as variation between minimum and maximum values with an average in between. The second study demonstrated that the risk framing that received highest ranking also prompts more stable risk preferences over three months testing period in comparison to standard measures of risk aversion. Thus, the second study corroborated the importance of the findings in the first study and also indicated that, although people can exhibit stable risk preferences if we ask them the right questions, these preferences are very specific to the risk domain.