Managerial perspectives on risk and risk taking
Management Science
Are risk-attitudes related across domains and response modes?
Management Science
Stochastic Dominance and Cumulative Prospect Theory
Management Science
Decision Analysis
Decision Analysis
A Prospect Theory Model of Resource Allocation
Decision Analysis
Decision Analysis
Determinants of Experienced Utility: Laws and Implications
Decision Analysis
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With the goal of investigating decision making under uncertainty in real-world decisions, we conduct a survey requiring 261 subjects to describe a recent real-life decision and to answer questions about several dimensions of such decision, including reference-dependence, domain, the default alternative, and the type of consequences. We confirm a key prediction of prospect theory, namely, that perceiving the sure outcome as a loss increases risk-taking behavior. Such perception of losses also increases the attractiveness (perceived probabilities and estimated consequences) of the risky option. The results also confirm that the domain (professional versus private) of a decision is a factor influencing risk-taking behavior. Risk-taking behavior does not vary across the three groups considered (undergraduates, MBA students, and executives) and does not depend on the type of consequences (monetary or not). We confirm that reference-dependence, and not the default alternative, is the driver of risk-taking behavior.