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The reported research examined the usefulness of placing risk propensity and risk perception in a more central role in models of risky decision making than has been done previously. Specifically, this article reports on two studies that examined a model in which risk propensity and risk perception mediate the effects of problem framing and outcome history on risky decision-making behavior. Implications of the pattern of results for future research are discussed.
Most scholars who have studied decision-making behavior in risky organizational situations have focused on the direct effects of one or two determinants of this behavior. However, such an approach does not adequately reflect the complex sets of influences on risk behavior in organizations. In addition, it has led to contradictions in the literature and potentially inaccurate conclusions about the causes of decision-making behavior (Sitkin & Pablo, 1992). For example, Kahneman and Tversky's "prospect theory" (1979) conclusion that negatively framed situations lead to greater risk taking contradicts the results of research by March and Shapira (1987) and Osborn and Jackson (1988).
In an attempt to build upon these direct effects approaches, Sitkin and Pablo (1992) proposed a mediated model of the determinants of risky decision making, theorizing that the effects of a number of previously examined variables on risk taking were not direct but were instead mediated by risk propensity and risk perception. Their model extended the direct effects approaches and posited a direct causal effect between the variables studied and risk taking. In addition, where direct effects approaches have predicted specific choices under conditions of risk, Sitkin and Pablo focused on the process of making risky decisions. This article reports two studies that provide initial tests of key portions of the SitkinPablo approach.
CLARIFYING KEY CONSTRUCTS AND DISTINCTIONS
Sitkin and Pablo (1992) reviewed a number of potentially relevant individual, organizational, and problem characteristics that have been identified as predictors of risky individual decision making. Perhaps the most significant focus of their analysis was the previously distinct effects of outcome history and problem framing, which they argued had been overlooked-and sometimes unintentionally confounded-in prior work. Specifically, Sitkin and Pablo suggested that previous contradictory findings could be explained by disentangling outcome history from problem framing. Following their theoretical emphasis, we focus on these two...