The good, the bad, and the lucky: Causal attributions for prior outcomes and subsequent risk-taking

Abstract

It is well documented theoretically in organizational studies and behavioral economics that prior gains and losses influence an individual’s subsequent risk-taking. We argue that this theory is incomplete and should account for not only the prior outcome but also perceptions of why the outcome occurred. In this paper, we integrate attribution theory with quasi-hedonic editing theory to theorize that causal attributions, i.e., how individuals explain an outcome or event, regarding prior gains and losses, influence subsequent risk-taking. We test our hypotheses using two experiments, a poker experiment, and a trivia experiment. Implications as well as future avenues for management research are discussed. Overall, our findings provide a new theoretical perspective on the relationship between prior outcomes, attributions, and subsequent risk-taking.