Risky decision-making

Silvio Aldrovandi

Chapter 65 in Elgar Concise Encyclopedia of Neuroscience and Management, 2026, pp 232-234 from Edward Elgar Publishing

Abstract: Risky decision-making involves choices under conditions of known or uncertain probabilities and is central to both psychological and managerial research. While economic models assume rational utility maximisation, psychological theories reveal that cognitive, emotional, and contextual factors often bias judgement. Prospect theory explains deviations from rationality through loss aversion and probability distortion, while models such as the priority heuristic and decision field theory describe the dynamic and constrained nature of decision processes. Neuroscientific findings implicate emotional and valuation systems, highlighting the role of affect and individual differences. Together, these perspectives explain how managers evaluate and act under risk.

Keywords: Expected utility theory; Prospect theory; Loss aversion; Probability distortion; Priority heuristic; Decision field theory (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035332885
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