| How can people's risk preferences be understood? Work from prospect theory (Kahneman & Tversky, 1979) claimed that not only are people risk averse in the gain domain, but people are also risk seeking in the loss domain. Nonetheless, different opinions have appeared (e.g. March & Shapira, 1987; Sitkin & Pablo, 1992) casting doubt on the claim that people seek risk only in the loss domain; this is considered a fundamental disagreement about prospect theory. In order to bridge this gap, theoretical justification was examined in this study and it was found this disagreement originated from the arbitrary criterion of evaluating utility that was from an assumption on which prospect theory relied. Therefore, risk taking also exists in the gain domain. Based on this argument, three studies were developed to investigate risk preference when the decision making is framed in the gain domain. In order to predict people's risk preference in the gain domain, an Affect Venture Decision Making Model was proposed and examined in study one and two. On the basic of a dynamic learning experiment design, the third study found that not only are people able to be risk taking in the gain domain, risk preference even is reversed (most of people select to taking a risk) under some conditions of when individual's prior experience and knowledge are controlled for. The Affect Venture Decision Making Model was also systematically supported by the three studies. This suggests potential theoretical advances and presents new empirical evidence in this domain.;In study one, the decision of new venture creation is framed in the gain domain. 217 undergraduate students at The Chinese University of Hong Kong undertook the study. As a result, 30 percent of participants selected to create new venture, the risky choice. Further, in order to predict rather than describe people's risk preference between creating new venture and working in a stable firm, an affect venture decision making model was proposed. The results support the affect venture decision making model. It is found that subjective probability moderates the association between subjective value and risk preference; the association between the intensity of immediate anxiety and risk preference is also moderated.;Study two examines emotional process in predicting the decision parameters proposed in the affect venture decision making model. Multiple expected emotions on the possible success or failure of creating new venture are studied to address (1) How much influence do the discrete multiple emotions have on the decision making process of creating new venture? (2) How is subjective judgment affected by these emotions? The empirical results support the affect decision making model. It is found that hope, regret, and surprise significantly predict the judgment of the subjective value and subjective probability. The study found that value judgment is more tasks specific. Probability judgment is influenced by both trait emotions and expected emotions elicited by the possible outcome of starting-up.;In study three, the theoretical question arises to justify whether emotions are rational or irrational in explaining the decision making and judgment. The decision making performance does not draw a convincing conclusion in judging emotion as rational and irrational. Therefore, different accounts of rationality were reviewed in this conceptual work. With the fading of instrumental rationality in understanding people's rationality, bounded rationality, adaptive rationality, and game rationality have appeared in the literature. After reviewing the terminology of rationality, this study proposed that emotions are able to be rational since it holds expressive rationality and functional rationality. Cognition can not solve the issue of uncertainty completely. In order to examine the proposed argument, 206 undergraduate students at The University of Queensland were recruited to take part in the online experiment. Three conditions were manipulated. The results replicated the findings in study one and two, which examine that the proposed affect venture decision making model can be generalized into different decision scenarios and different samples.;Keywords. Risk preference, gain domain, affect, new venture creation, rationality... |
