In this paper we examine the role of social and organizational knowledge in managerial decision-making. In a series of experiments, we examined the following questions. (1) How are some implicit organizational variables such as the size of a group and the composition of a group related to risk perception and risky decisions? From a Darwinian perspective, humans have lived in small, nomadic, hunter-gatherers' groups throughout almost the entire evolutionary time. In making decisions at risk, the size of the group thus may serve as a cue signalling the structure and functions of a social group (e.g., kinship, reciprocity, interdependence among group members). To investigate the effects of these organizational variables, Wang (1996a, 1996b, 2001) used a well-known example of irrational decisions, framing effects (Tversky & Kahneman, 1981), as an empirical probe. Framing effects, characterized by an irrational reversal in risk preference due to different ways of presenting / framing the same choice outcomes, appeared only in large group contexts but disappeared in small group and kinship group contexts. Evolutionarily recurrent small group contexts (less than 1000 people) eliminated irrational reversal in risk preference. (2) Would risky choices between a sure option and a gamble of equal expected value vary as a function of the types of information provided in a decision problem? In contrast to verbal framing (e.g., presenting the same choice outcomes as if they are gains or as if they are losses), situational information about the real status of an organization should have independent reflection effects on risky choice. This so called reflection effect has been repeatedly shown in the literature, where people tend to be risk averse in gain situations but risk seeking in l...

Correspondence concerning this article should be addressed to X.T. Wang, Psychology Department,