Goal-Induced Risk Taking in Negotiation and Decision Making

Abstract

Three experiments test whether specific, challenging goals increase risk taking. We propose that goals serve as reference points, creating a region of perceived losses for outcomes below a goal (Kahneman & Tversky, 1979; Tversky & Kahneman, 1992). According to the Prospect Theory value function, decision makers become more risk seeking in the domain of losses. In all three experiments we compared a “do your best” condition with a “specific, challenging goal” condition. The goal condition consistently increased risky behavior in both negotiation and decision making tasks. The discussion considers how goals influence expectations, strategy choice, and unethical behavior.