Goal framing and risk

This study provides insight for managers and decision makers on the behavior under risk of employees when they are given goals framed in a certain way. I study two different approaches to formulate goals, goals that are just focused on getting certain favorable actions done and goals that are just focused on getting a final end result. I conduct a survey with two treatment groups among students to see if subjects have a different risk perception and risk attitude when they are presented with these different goal frames. Furthermore, I study if the projection of the goal difficulty (easy or hard) has an effect on risk perception and risk attitude of the subjects. According to the results, subjects have the same level of risk perception and risk attitudes when either presented with goals that just focus on actions compared to when they are presented with goals that just focus on results. Subjects did have a significant lower perception of risk when their goal was relatively easy to attain compared to when their goal was hard to attain. However, this difference in reference outlook on the goal difficulty did not extend in the same way to their risk attitude. Risk perception is influenced by the difficulty of the goal, but risk attitude is not.