Speaker: Dr. Zuo Xi
Assistant Professor of Organization Behaviour
London Business School
Time: 1:00pm – 2:00pm
Date: June 19 (Thu), 2014
Venue: Meeting Room Level 5, South Building
A commonly held assumption in the psychology literature is that risk taking is a stable personality trait, and thus individuals can be classified as either risk-seeking or risk-averse. Yet, one of the most interesting empirical findings in the research on judgement and decision making is that people’s risk preferences are inconsistent across situations. In a series of experiments using a stock investment paradigm, we examine when people are risk-seeking versus risk-averse. Our evidence suggests that promotion motivation (when people focus on growth and advancement) predicts shifts between risky and conservative choices in the domain of gains, whereas prevention motivation (when people focus on maintaining safety and security) predicts shifts in risk preference in the domain of losses. In addition, by examining the underlying strategic motives guiding risky choice, our findings provide evidence that the same motive can be associated with both risk averse and risk-seeking choices. We summarize our findings as a model of motivated shifts in risk preference that depends on the interplay among motivation (e.g., promotion; prevention), current state (e.g., loss domain; gain domain), and tactical options (e.g., what the risky vs. conservative option might do).
A Motivational Model of Shifting Risk Preferences(.pdf)