The Evaluation of Risky Information Technology Investment Decisions

It is proposed that the risk preferences of decision evaluators and the decision “domain” systematically influence evaluations of decision makers' information technology investment decisions.

Abstract

This research proposes that the risk preferences of decision evaluators and the decision “domain” systematically influence evaluations of decision makers' information technology (IT) investment decisions. Results of an experiment with 160 M.B.A. student participants indicate that risk-seeking evaluators rate IT investment decisions higher than do risk-averse evaluators. Further, decision evaluators are influenced by the gain and loss decision domains when evaluating a decision maker's risky information technology investment decisions. The findings indicate that providing decision domain information to decision evaluators leads to systematic differences in IT investment evaluations. A key contribution of this study is the discovery of the relevance of prospect theory to IT evaluation processes.