| The present study extends previous research on prospect theory to decision-making processes in business settings, proposing a psychological climate model as a frame for decisions. Flawed decision processes have been alternatively explained in the literature by self-interested behaviors, groupthink, and by prospect theory. Relying on the explanation provided by prospect theory, this study proposes a model of psychological climate that integrates both the hierarchical model, PCg, (James & James, 1989) and the strategic climate focus or "climate for something" (Schneider, 1990) as a decision frame, and posits that individuals' goal-orientation---specifically avoid-goal orientation---will moderate the relationship between climate and individuals' reference points for decisions. Using a quasi-experiment with 122 MBA students from Ecuador, this study manipulated climate conditions: a positive condition perceived as beneficial to the individuals' well-being and conducive to gains, and a negative condition perceived as detrimental to the individuals' well-being and conducive to losses. In the simulated business setting, participants confronting a decision under uncertainty were expected to behave as predicted by prospect theory. In general the results do not support the study hypotheses---not even the hypothesized moderating role for avoid-goal orientation. However, those participants in the positive climate condition behaved as expected, and exploratory analysis indicates that individuals' learning-goal orientation moderated the relationship between climate and reference point. The results are discussed in terms of the decision frame, the interpretation of decision choices, individual differences, and participants' background. |
