Risk-taking in Academic Libraries: The Implications of Prospect Theory

Abstract

Risk is a fundamental characteristic of the landscape of academic libraries, and has typically been seen in the context of strategic planning. However as the pace of technological change increases rapidly each year, and the financial and organizational pressure for demonstrating library value to our community grows apace, it is important to reassess our attitudes to risk. The future of our libraries is at play. Prospect Theory is an influential and ground-breaking model from the field of Economics that helps us to better understand how people make decisions under risk. Applying the basic principles of Prospect Theory to academic libraries can help us reframe our approach to risk assessment and to understand our actions from a different perspective. This paper describes the dynamics of risk in academic libraries and contextualizes these dynamics in relation to this model.