Opportunity costs and the framing of resource allocation decisions

Gregory B Northcraft, Margaret A. Neale

Research output: Contribution to journalArticle

Abstract

This paper develops and tests an information-processing explanation of the behavior of decision makers when resource allocation decisions meet with setbacks. Findings support the contention that because opportunity costs often are ignored, setback decisions may be framed as choices between certain losses and the possibility of larger or no losses. Making opportunity costs more explicit alters the framing of such decisions and leads to decisions which more closely mirror traditional cost/benefit prescriptions.

Original languageEnglish (US)
Pages (from-to)348-356
Number of pages9
JournalOrganizational Behavior and Human Decision Processes
Volume37
Issue number3
DOIs
StatePublished - Jun 1986

ASJC Scopus subject areas

  • Applied Psychology
  • Organizational Behavior and Human Resource Management

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