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  • 2010
  • Article
  • California Management Review

Fretting About Modest Risks Is a Mistake

By: Matthew Rabin and Max Bazerman
  • Format:Print
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Abstract

Managers often engage in risk-averse behavior, and economists, decision analysts, and managers treat risk aversion as a preference. In many cases, acting in a risk-averse manner is a mistake, but managers can correct this mistake with greater reflection. This article provides guidance on how individuals and organizations can move toward greater reflection and a more profitable aggregate portfolio of decisions. Inconsistency in risk preferences across decisions is a costly mistake for both individuals and for organizations.

Keywords

Decision Biases; Risk Management; Risk and Uncertainty; Decision Making

Citation

Rabin, Matthew, and Max Bazerman. "Fretting About Modest Risks Is a Mistake." California Management Review 61, no. 3 (May 2019): 34–48.
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About The Authors

Matthew Rabin

Negotiation, Organizations & Markets
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Max H. Bazerman

Negotiation, Organizations & Markets
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