If you want to encourage your employees to take on more risk, you should frame your problem in terms of a gain.

Question

BlackTom AI · Accepted Answer

The statement under consideration is a claim about framing in risk-taking behavior. 
Option 1: True. Saying you should frame a problem in terms of a gain to encourage employees to take on more risk is not universally accurate. In decision framing, gains can increase risk aversion in some contexts due to loss aversion and the certainty effect, while losses framed as potential downfalls can either prompt risk-seeking or risk-avoidant behavior depending on the individual's preferences and the specific situation. Therefore labeling this approach as always effective is an overgeneralization.
Option 2: False. Framing in terms of gains can influence motivation, but the impact on risk-taking is not reliably to increase risk-taking across all individuals and scenarios. Behavioral economics shows that people react to framed outcomes in nuanced ways: gains often promote cautious behavior to secure the sure positive outcome, whereas losses can sometimes push people toward riskier decisions to avoid a worse loss. Thus the blanket statement that gain framing should be used to promote more risk oversimplifies a complex cognitive bias landscape.
In sum, the claim asserts a universal rule that gain framing will reliably elevate risk-taking, but research indicates framing effects interact with loss aversion, risk preferences, and context, so the statement is not robust across situations.

33:620:302:01 MANAGEMENT SKILLS Final Exam

If you want to encourage your employees to take on more risk, you should frame your problem in terms of a gain.

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