The Choice Dilemma Questionnaire (CDQ) has been extensively used in risk taking studies due to its ease of administration and its ability to consistently produce risky shifts. However despite its wide use, it has been subject to a number of criticisms. This study attempts to see if the CDQ score is factorially pure or if it is made up of sub- scales. Responses from two hundred and two students were factor analysed and it was found that four factors emerged. The study concludes that risk-taking is a multidimensional concept and one needs to take into account the different types of risks if we are to use risk-taking propensity as a personality measure while studying individual differences.
Keywords: Risk-taking, Propensity, Choice dilemma, Prestige risk. Commitment risk. Career risk.
Important decisions take place under conditions of uncertainty and risk. This has prompted research on decision making under risk and attracted academicians and practitioners from such diverse fields as economics (Knight 1971), psychology (Kahneman & Tversky, 1979), finance (Jarret, 1990) and management (Bowman, 1980). Despite the advances in quantitative techniques, we are unable to reduce decision making into a routine function, and we value good decision-makers. The use of personality tests in selection and evaluation points to the nexus between the personality traits of the decision maker and the decisions made. Therefore a number of researchers have focussed their attention on the risk-taking propensity of managers and entrepreneurs (MacCrimmon & Wehrung, 1984; Sunder & Kamalanabhan, 1993).
Though a variety of instruments and techniques have been used by researchers (Montgomery & Landers, 1974; Singh, 1989; Chaubey, 1974; Kogan & Wallach, 1964), the Choice Dilemma Questionnaire (CDQ) stands out in the research on risk-taking propensity. The CDQ has been used in studies encompassing a wide range of research interests such as the risky shift phenomenon (Burastein, Miller, Vinokur, Katz & Crowley, 1971 ), risk value hypothesis (Brown, 1965 ; Levinger & Schnider, 1969), the influence of age on risk-taking (Vroom & Pahl, 1971), and cultural effects on risk-taking (Carlson & Davis, 1971). The instrument as used by Stoner (1961) and popularised by Kogan and Wallach ( 1964) has been widely used for measuring the general risk-taking propensity of individuals. The instrument has also been used in studies attempting to identify differences between groups of managers and entrepreneurs (Brockhaus, 1980). Despite its popularity, the CDQ has been criticised on various counts. Shaver and Scott, (1991) comment as follows:
"The CDQ is being put to use for which it was not designed. As employed by Kogan and Wallach and legions of other psychologists, the CDQ was the vehicle to measure changes in expressed levels of riskiness that occurred as a consequence of group discussion. The CDQ never underwent the sort of reliability and validity testing that would be required for a real personality measure. To use such a measure as the index of a relatively enduring personality trait is a serious methodological error".
MacCrimmon and Wehrung (1984) have pointed to the following deficiency in the CDQ. "In the usual choice dilemmas, the subject is asked to advise 12 different individuals in highly dissimilar settings. Each of these situations implies a situation for which a person has no experience."
Cartwright ( 1971 ), in a review of studies which used CDQ, notes that a person's rank on the CDQ score does not necessarily correspond to his rank on even a majority of items. Though Higbee (1971) has noted that others have found CDQ scores reflecting behavior in simple betting tasks, he has raised questions as to whether the CDQ scores will reflect behavior in complex decision situations. Vroom and Pahl (1971), using a sub-set of the items in the CDQ, have reported that the inter-correlation between the items is poor. …