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Uncertain outcome presentations bias decisions: experimental evidence from Finland and Italy

  • S.I.: BOM in Social Networks
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“Superior performance is ultimately based on the people in an organization. The right management principles, systems, and procedures play an essential role, but the capabilities that create a competitive advantage come from people—their skill, discipline, motivation, ability to solve problems, and their capacity for learning”

Hayes, Wheelwright, and Clark (1988) (p. 242)

Abstract

Even in their everyday lives people are expected to make difficult decisions objectively and rationally, no matter how complex or uncertain the situation. In this research, we study how the format of presentation and the amount of presented information concerning risky events influence the decision-making process, and the propensity to take risk in decision makers. The results of an exploratory survey conducted in Finland and in Italy suggest that decision-making behavior changes according to the way the information is presented. We provide experimental evidence that different representations of expected outcomes create distinct cognitive biases and as a result affect the decisions made. This identified change in the perception of risk has, to the best of our knowledge, not been identified nor directly studied previously in the scientific literature. The paper thus presents novel insights into managerial decision-making that are potentially relevant for decision support theory, with implications to decision-makers and for information providers. Understanding the impact of various forms of presentation of risk is crucial in being able to convey information clearly and in a way that avoids misunderstandings. The implications of the results on being able to avoid opportunistic manipulation of decisions, are also of great concern in many application areas. Social networks are more and more frequently being used as a source of information and in this context it is crucial to acknowledge the effect that different ways of presenting and communicating risky outcomes may have on the behavior of the target group. Here presented results may, for example, be highly relevant for marketing and advertising that is conducted by using social media or social networks.

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Notes

  1. The initial sample included 57 students. However, two questionnaires were unusable because of missing data. Hence, the resulting sample size was 55. Moreover the majority was master students (except for just 3 bachelor students) and 63.3 % of the resulting sample (35 out of 55) were Finnish, while the rest were international students.

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Acknowledgments

The research presented in this paper was partially supported by the Grant IGA_FF_2015_014 of the internal grant agency of the Palacky University, Olomouc.

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Authors and Affiliations

  1. School of Business and Management, Lappeenranta University of Technology, P.O.Box 20, 53851, Lappeenranta, Finland

    Azzurra Morreale, Jan Stoklasa & Mikael Collan

  2. DICGIM – Economics and Management Research Division, Università degli Studi di Palermo, Viale delle Scienze, 90128, Palermo, Italy

    Giovanna Lo Nigro

  3. Department of Applied Economics, Faculty of Arts, Palacky University, Olomouc, Křížkovského 12, Olomouc, 771 80, Czech Republic

    Jan Stoklasa

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  1. Azzurra Morreale
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  2. Jan Stoklasa
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  4. Giovanna Lo Nigro
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Correspondence to Azzurra Morreale.

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Morreale, A., Stoklasa, J., Collan, M. et al. Uncertain outcome presentations bias decisions: experimental evidence from Finland and Italy. Ann Oper Res 268, 259–272 (2018). https://doi.org/10.1007/s10479-016-2349-3

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  • DOI: https://doi.org/10.1007/s10479-016-2349-3

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