The observed association between performance and organizational risk taking has usually been attributed to the influence of performance on risk preferences. Here I show how a simple model of adaptation, which only assumes that organizations avoid activities with poor past performance, can...

Successfully predicting that something will become a big hit seems impressive. Managers and entrepreneurs who have made successful predictions and have invested money on this basis are promoted, become rich, and may end up on the cover of business magazines. In this paper, we show that an...

Inspired by the behavioral theory of the firm and prospect theory, a large empirical literature has examined the association between performance and organizational risk taking. Such associations have often been attributed to the influence of performance on risk attitudes. This paper shows that a...