Corporate Managers’ Risky Behavior: Risk Taking or Avoiding?

This study reports on five experiments that investigate professional corporate managers’ risky behavior across decision settings in which various forms of financial data are evaluated. Specifically, managers decisions to take or avoid risk are investigated when evaluating data in the form of profits, losses, revenues, costs, and expenditures. The results indicate that, with one exception (i.e., clear financial losses), a greater tendency towards risk avoidance exists when managers evaluate many forms of financial data. These results provide evidence on managerial risky behavior across decision contexts and suggest that managers use inclusive “mental accounts” in their decision processes.