Four dot points to end the chapter

  • • In the original version of prospect theory, the reference point is zero or the status quo.
  • • Later research expanded the reference point concept to include goals and expanded the number of reference points that can shape a decision-maker’s behaviour.
  • • Within organisations, various career-oriented and organisational-oriented reference points lead to oscillations in risk preferences, from risk seeking to risk averse and back again.
  • • Sometimes, the position of individuals, teams and whole agencies relative to these reference points may be determined by broader organisational or governmental decisions.


  • 1 Zegart (2005, p.78).
  • 2 Although failing to find and rank a terrorist suspect also represents an error and potential for loss, we are assuming for the moment that no known suspect is unranked and the team is not in error for not having ranked a suspect about whose existence the team was unaware.


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