That managers take additional risks to escape from a threatening situation is a wellknown
theme in the field of managerial decision making. For example, Shapira (1997)
and Kahneman and Tversky (1986, p. S258) show that people will take greater risks to
escape losses than to secure gains. As a consequence, people's behavior tends to change
in unexpected and unattractive ways when they are confronted with increasing losses.
Thus in finance, where many occupations are high-wire acts, the fear of falling is
constantly in the background and sometimes can lure people into disastrous activities.
Individuals can become gripped by a frantic panic and may try to conceal these losses, or
double up their bets like crazed gamblers trying to punt their way out of their mounting
debts. This is the classic gambler’s fallacy.