Changes

|+ {{table number|1}}Biases affecting risk decisions

|+ {{table number|1}}Biases affecting risk decisions

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! Type of Bias

! Type of Bias || Common Example

! Common Example

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| Framing effects

| Framing effects || Decision makers will take a greater gamble to avoid a loss than to make an equal gain

| Decision makers will take a greater gamble to avoid a loss than to make an equal gain

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| Existence of prior account

| Existence of prior account || Decision makers are more inclined to take a risk at the beginning of a project than later in the project's life

| Decision makers are more inclined to take a risk at the beginning of a project than later in the project's life

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| Maintaining a consistent frame of reference

| Maintaining a consistent frame of reference || Decision makers are more likely to invest during a run of good fortune and less likely to invest during a run of bad fortune

| Decision makers are more likely to invest during a run of good fortune and less likely to invest during a run of bad fortune

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| Probability of success

| Probability of success || A venture having a perceived high chance of success is preferred over a second venture having a low chance of success, even though the expected value of the second venture is clearly superior

| A venture having a perceived high chance of success is preferred over a second venture having a low chance of success, even though the expected value of the second venture is clearly superior

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| Wrong action versus inaction

| Wrong action versus inaction || Managers avoid criticism by not making a decision rather than taking action that could result in the same loss

| Managers avoid criticism by not making a decision rather than taking action that could result in the same loss

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| Number of people making the decision

| Number of people making the decision || Groups are more prone to take risks than are individuals

| Groups are more prone to take risks than are individuals

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| Workload and venture size

| Workload and venture size || Large volume ventures are preferred over smaller ones, especially when decision makers are busy

| Large volume ventures are preferred over smaller ones, especially when decision makers are busy

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| Personal familiarity

| Personal familiarity || The “comfort bias”: decision makers are more risk prone in deals or environments with which they have had past good experience

| The “comfort bias”: decision makers are more risk prone in deals or environments with which they have had past good experience

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