The Effect of Authority and Option Frames on Resource Allocation Decisions: Using Prospect Theory to Predict Choices and Expressed Justifications and Advocate Creative Solutions

Abstract

Changing conditions often require authority figures to develop options for reallocating resources. Based on Prospect Theory, this study predicted that individuals exposed to gain frames or in authority roles would prefer risk-averse options and construct messages expressing desire to avoid risks, whereas those exposed to loss frames or in less powerful roles would prefer risk-taking options and express a desire to take risks. In this experiment, gain frames and being authority figures increased preferences for budget-cutting options with risk-averse options, whereas loss frames and limited authority increased preferences for risk-taking options and the likelihood that individuals advocated creative solutions.

Keywords:

• Authority
• Change Management
• Decision Making
• Power
• Prospect Theory
• Risk Communication
• Risk Preference

Thanks to Lauren Grill, Stephanie Struh, Marissa Del Campo, Andrew Curran, Melissa Culver, John Dahlquist, Tom Johnson, Jennifer Rosen, and Justin Voccola for assistance with coding.

Notes

Note. N = 202.

Additional information

Notes on contributors

Meghann L. Drury

Meghann L. Drury (PhD, Northwestern University, 2006) is a consultant at Deloitte Consulting, LLP, New York.

Michael E. Roloff

Michael E. Roloff (PhD, Michigan State University, 1975) is a professor in the Department of Communication Studies at Northwestern University.