Perspectives, perceptions, and risk-taking behavior

Several organizational researchers have recently argued that the propositions of Kahneman and Tversky's (1979) prospect theory are in conflict with commonly held notions of risk taking for opportunities and risk aversion for threats. This investigation was an attempt to empirically separate threat and opportunity perceptions from loss and gain perspectives. Experiment 1 (N = 244) revealed that most decision makers, faced with a traditional framing problem, perceived the risky alternative as an opportunity when they were in the loss domain, but perceived it as a threat when they were in the gain domain. Experiment 2 showed that framing the same (loss and gain) problems as threats versus opportunities influenced risk taking, such that management students (N = 84) were more risk taking for opportunity-framed problems and risk averse for threat-framed problems. At the same time, the students took more risks for the loss problem than for the gain problem. We conclude that threat and opportunity perceptions are theoretically and empirically distinguishable from loss and gain perspectives. (C) 1996 Academic Press, Inc.