Decision Analysis Vol. 3, No. 3, September 2006, pp. 163–176 issn 1545-8490  eissn 1545-8504  06  0303  0163 inf orms ® doi 10.1287/deca.1060.0075 ©2006 INFORMS A Survey Study of Factors Influencing Risk-Taking Behavior in Real-World Decisions Under Uncertainty Manel Baucells IESE Business School, Avenida Pearson, 21, 08034 Barcelona, Spain, mbaucells@iese.edu Cristina Rata Universitat Pompeu Fabra, Ramon Trias Fargas 25-27, 08005 Barcelona, Spain, cristina.rata@upf.edu W ith the goal of investigating decision making under uncertainty in real-world decisions, we conduct a survey requiring 261 subjects to describe a recent real-life decision and to answer questions about several dimensions of such decision, including reference-dependence, domain, the default alternative, and the type of consequences. We confirm a key prediction of prospect theory, namely, that perceiving the sure outcome as a loss increases risk-taking behavior. Such perception of losses also increases the attractiveness (perceived probabilities and estimated consequences) of the risky option. The results also confirm that the domain (professional versus private) of a decision is a factor influencing risk-taking behavior. Risk-taking behavior does not vary across the three groups considered (undergraduates, MBA students, and executives) and does not depend on the type of consequences (monetary or not). We confirm that reference-dependence, and not the default alternative, is the driver of risk-taking behavior. Key words : real-world decisions; risk-taking behavior; reference-dependence; domain; default alternative; type of consequence History : Received on October 13, 2005. Accepted by Don Kleinmuntz and George Wu on August 5, 2006, after 2 revisions. 1. Introduction Most of the descriptive research on decision making under uncertainty is done by means of laboratory experiments (Wu et al. 2004). Laboratory research has the advantage of performing controlled experiments, while allowing for the use of real monetary incen- tives. The extent to which the results of these exper- iments can be generalized to real-world decisions is still under debate (e.g., Kühberger et al. 2002). Our study aims to contribute to this debate by investigat- ing risk-taking behavior in decisions that are likely to be more representative of real-world decisions. The methodology we chose was to design a sur- vey in which subjects were asked to describe certain aspects of a recent real-life decision. We approached three groups of subjects—undergraduates, MBA stu- dents (hereafter “MBAs”), and executives. The sub- jects were required to fit the description in a simple decision analytic framework consisting of two alter- natives and one uncertainty. Subjects then answered questions regarding several dimensions of their decisions including reference-dependence, domain, default alternative, and type of consequences. Based on this survey, our goal is to examine the general- izability of various phenomena that have been doc- umented in the laboratory, as well as to investigate some new factors. We see our methodology as a com- plement to standard laboratory studies. Before designing the survey, we collected a list of potential factors that may influence risk-taking behav- ior. Traditional decision theory argues that the mag- nitude of outcomes and their probabilities, together with stable risk preferences over outcomes, are the major factors that influence risk-taking behavior (Keeney and Raiffa 1976, Clemen and Reilly 2001). Behavioral decision theorists expanded the list of rel- evant drivers of risk attitudes and risk perceptions. 163