Towards a Multi-Dimensional Perspective of Performance Feedback and Risk Taking

This study investigates how different conceptualizations of aspiration and risk taking affect performance feedback theory. We review recent literature and find that: 1) aspirations are conceptualized as current performance and cumulative wealth, and 2) risk taking is conceptualized as the propensity to take risks and the amount to put at stake. We conduct simulation experiments to explore the implications of these different conceptualizations. We find that different conceptualizations lead to inconsistent organizational outcomes, such as long-term performance and survival rate. We also used data from Texas holdem to study decision-makers’ risk taking behavior. We find that decision-makers’ reactions in propensity and amount are not always aligned for a given current performance and cumulative wealth. Taken together, this set of results points to a significant gap in the literature with potential for much fruitful future work.