| Sumario: | Researchers have found a tendency for subjects in gambling situations to reverse their preferences for different types of gambles. That is, subjects tended to choose to play more conservative (low variance) gambles, but to set higher selling prices for riskier (high variance) gambles, despite the bets having equal expected values. The present research investigated this preference-reversal phenomenon in a simulated managerial decision task. In the task, student subjects had to choose which of two products to develop and market as well as set prices for the products. Subjects were given estimates of the profits (or losses) that would accrue if the product were a success or a failure and the corresponding probabilities of success and failure. In addition, some subjects made the decisions as individuals, whereas others made the decisions in groups. Results revealed that subjects tended to reverse their preferences but not as frequently as found in the gambling task. Further, the results revealed that groups were significantly more prone to the decision bias than individuals.
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