The Shape of Utility Functions and Organizational Behavior

Joost Pennings (joost.pennings@maastrichtuniversity.nl) and Ale Smidts

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: Based on measurements with 332 owner-managers, the global shape of the utility function (i.e., S-shaped versus concave or convex over the total range of outcomes) appears to discriminate organizational behavior. Whereas the degree of risk aversion, based on the local shape of the utility function, may be important in explaining owner-manager's trading behavior, the global shape of the utility function appears to drive more structural organizational behavior.

Keywords: organizational behavior; prospect theory; risk aversion; utility theory (search for similar items in EconPapers)
JEL-codes: C44 L29 M M31 (search for similar items in EconPapers)
Date: 2002-03-01
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Citations: View citations in EconPapers (1)

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Journal Article: The Shape of Utility Functions and Organizational Behavior (2003)
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