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We study the risk attitudes of an important segment of the economy: managers. We conduct artefactual field experiments with 130 managers from 12 industrial companies. Our analysis is particularly careful to evaluate alternative models of decision-making under risk. In general, we find that the managers in our sample are moderately risk averse. Assuming a standard EUT model they exhibit similar risk attitudes as other sample populations. However, we find some differences within our sample. Superiors exhibit a higher level of risk aversion than team members that work for them in their department. Comparing purchasing managers with a random sample of non-purchasing managers from different corporate functions such as controlling, sales, engineering and so on, we cannot conclude that they differ from each other. We show that alternative theories of risky behavior provide complementary information on the risk attitude of industrial managers. While an expected utility theory model only characterizes managers as globally risk averse, we learn from a prospect theory model that the managers in our sample are only risk averse for a certain range of payoffs. For other payoffs, they even exhibit risk-seeking behavior. The reference point that determines which outcomes are to be viewed as losses and which as gains is not that induced by the task frame. We show that subjects had implicit expectations about their earning in the experiment, and used these expectations to evaluate the lotteries presented to them. Remarkably, the managers in our sample did not weigh probabilities and they did not exhibit a hypothetical bias in their decisions.


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