Affect Of Attitudes To Risk On Decision Outcomes



Individuals tend to take bigger risks if they have a big amount of wealth in their portfolio. Normally, where there is a high risk in an investment, it is probable that the payoff tends to be bigger, and where the risk is small, the payoffs tend to be smaller. Due to this reasons, individuals with massive wealth in their portfolio tend to be riskier so as to maximize their payoff. This type of individuals mostly is driven by their ambition to acquire more wealth in the future. Thus, they take a bigger risk in their investments because even if they lose out because of an unsuspected market condition, their wealth always cautions them and thus they have little to fear.Another individual factor that impacts the attitude on risk on the decision outcomes is the knowledge from the market that mostly is bought from the consulting and experts firms in the market. These firms gather, analyze and predict the future market condition and thus they can advise managers on the riskiness when undertaking certain projects and investments. Knowledge from the experts helps individuals to make informed and proper decisions that have a positive impact on the expected outcomes. Although the perfect information is costly, it saves a great deal as opposed to having no information at all. When one has the knowledge, he or she has power, and it is only right that he uses it for the betterment of his decisions and judgment.Another individual factor that affects the risk attitudes on decision outcomes is the earlier periods’ outcomes.