To illustrate that inducing risk seeking
may be optimal in a contest, we consider the case of a research tournament where the sponsor seeks to maximize the expected value of the best submission obtained from n contestants.
Aversion to risk on behalf of some people can still be accounted for within the expected utility theory by assigning some utility to certainty; that is in the above example, both games with uncertain outcomes will be equivalent to less than $250 for a risk-averse, $250 for a risk-neutral and more than $250 for a risk seeking
These graphs exhibit degree of risk aversion and risk seeking
in the experimental conditions.
Contrary to Chiles and McMackin's (1996) proposition, the preceding argument suggests that, at a given level of asset specificity, risk seeking
managers will be more likely rather than less likely to develop close ties with their partners while risk averse managers will be more likely to retain the safety of the market as a fall back position.
If the potential users are risk seeking
, as a result of framing the decision-making information as helping them avoid losses, then their bids will reflect a risk-seeking preference.
Cross cultural studies on sensation seeking (Zuckerman/Eysenck/Eysenck 1978) and attitude toward risk (Orpen 1983) lend some credence to the argument that Japanese managers' risk seeking
differs from that of US managers.
Furthermore, the regression coefficient for the interaction between culture and performance indicates that on-or-above-target firms become risk seeking
for high levels of risk culture (beta estimate positive: b = +0.
Bank charter values, dissipated through greater competition as a result of environmental and regulatory changes, no longer served to mitigate the risk seeking
incentives provided by the system of deposit insurance.
In contrast, the propranolol and control participant groups both displayed similar tendencies toward both risk aversion for pure gain gambles and risk seeking
for pure loss gambles.
Consumers tend to be risk seeking
when it comes to losses, whereas they tend to be risk averse when it comes to gains, so that when they are presented with identical situations, consumers with different risk preferences have different risk perceptions (Kahneman & Tversky, 1979).
One finding of interest in the present research was that decreased perceptual fluency may induce risk aversion, as measured by our participants' choice of lottery tickets, but also may result in risk seeking
, as measured by our participants' valuation of them.
Results of the Chinese sample showed that the type of framing effect was unidirectional, characterized by predominant risk seeking
under both framing conditions, with more risk seeking
under the negative frame than the positive frame.