6.4.1 Implications

What does this all imply for decision making? First, the importance of control perceptions to decision makers' perceptions of risk suggests an important source of bias. In a study of managers' risk taking, Zur Shapira (1995) found that managers would often discount risks on the basis that they felt they could control them. In my own research on traders' decision making, I found traders to suffer from control illusions and their risk judgement and performance to suffer in consequence: illusory control beliefs lead to underestimation of risks (Fenton-O'Creevy et al., 2003). Second, individual decision makers may behave in risk-averse or risk-seeking ways, depending both on how potential outcomes are framed and on their personal reference points.