Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
In this case, in order to verify the theories discussed above, five experiments were performed on 72 corporate financial managers with significant experience in the field. The following experiments were conducted: framing, profits and losses, profits and expenditures, revenues and costs, profits and costs.
The main purpose of all these experiments was to analyze these managers' risk taking behavior when dealing with different forms of financial data. The experiments consisted in choosing between two competing capital investment alternatives. One of the alternatives represented a risky option, while the other alternative represented a certain or a less risky option. The managers subjected to the experiment were supposed to select one of the alternatives and to rate it on a five point preference scale.
The first experiment was the Framing, and was based on the classic lives saved, lives lost scenario, proposed by Tversky and Kahneman. In this experiment, one group of managers was exposed to the gain, or save frame, and the other group was exposed to the loss frame. The economic conditions of the experiment consisted in expected loss of $600,000 for the next quarter. In this case, the results revealed that the framing effects supported the Prospect Theory. Also, it seems that "artificially changing the frame of the decision problem resulted in a change in the financial managers' decisions, even though the alternatives were essentially identical in both groups. Risk avoiding...
All these experiments indicated that corporate managers tend to avoid taking risks when making decisions. The study also concluded that managers will generally tend to avoid taking risks in most financial contexts and conditions, different from the ones presented in the study.
In my opinion, this experiment and its study are quite useful for understanding individuals' choices in the decision making process. The results of the study definitely bring a little light in understanding the behavior of such individuals. However, it seems to me that these experiments may not have been complex enough. I think that the situations subjected to the experiment were too vague, too general, and that the alternatives were not complex. Also, my opinion is that one must not generalize these results, as I think that they may not apply to a large segment of individuals involved in decision making processes and risk management, in different fields of activity.
Reference list:
1. Sullivan, Kathryn (1997). Corporate Managers' Risky Behavior: Risk Taking or Avoiding? Journal of Financial and Strategic Decisions. Vol. 10, No. 3. Retrieved September 27, 2008 from http://www.studyfinance.com/jfsd/pdffiles/v10n3/sullivan.pdf.
Reference list:
1. Sullivan, Kathryn (1997). Corporate Managers' Risky Behavior: Risk Taking or Avoiding? Journal of Financial and Strategic Decisions. Vol. 10, No. 3. Retrieved September 27, 2008 from http://www.studyfinance.com/jfsd/pdffiles/v10n3/sullivan.pdf.
Operations and Supply Chain Management. Upper Saddle River, NJ: McGraw Hill Higher Education. 13th Edition. Wayne Norman, Chris McDonald. (2004). Getting to the Bottom of the "Triple Bottom Line." Business Ethics Quarterly, 14(2), 243-262. L Wang, L Lin. (2007). A methodological framework for the triple bottom line accounting and management of industry enterprises. International Journal of Production Research, 45(5), 1063. 5. Explain why the need to focus capacity on a fairly limited
Work-Home Balance Let's reports firing line question work/home balance, perspectives. First,'s employers advised issues, a wide variety sources expressing glee opportunities opened technology employers -opt -increasing portions employees' lives: Lane, S. Business history and future plans letter The work-home balance Technology is both a benefit and a bane to employees and employers alike. From an employee perspective, technology enables telecommuting and reduces 'real world' commuting time. It permits parents to remain with their
Taylor had faith that the best man for the job is to be chosen. He is required to possess the physical and intellectual qualities to attain the required output. However, it was up to the management to make it sure that the right people were chosen and trained. This forms the foundation for the quality circles. Operatives congregate to deliberate on work related difficulties, prove into the reasons and solutions
In the contemporary business world, employee performance is a fundamental determinant in the attainment of organizational goals and objectives. For this reason, organizations come up with various ways of motivating their workforce so as to ensure there is a high employee performance. Work life balance is a largely significant observable fact that is of considerable concern to different employees in an organization. In delineation, work life balance is expediting and
Work Values Cross-cultural comparison on work value between U.S. And China A value is "what a person consciously or subconsciously desires, wants, or seeks to attain" (Locke, 1983). Peterson and Gonzalez (2005) say values "are motivational forces," and "influence the role work plays in people's lives." Dawis (2005) asserts that each person (P) has requirements that need to be met, most through their environments (E). In fact, Dawis claims that "Many of
Public as a Social Work Professional When I began my education, I had no idea that I would eventually be drawn to the helping professions. Instead, I began my education in 2006 at Somerset Community College, where I obtained an Associate Degree in Business Administration. At that time, I felt that I would continue to pursue business as a career and might further my education in that area. However, I