The Influence of Behavioral Economics on Decision Making in Operational Risk Management

PSB ACADEMY，6 Raffles Boulevard, #03-200, Marina Square, Singapore 039594

^* Corresponding author: 4251QYWB@psba.edu.sg

Abstract

Behavioral economics reveals the potential cognitive biases and systematic judgment errors of companies in encountering risks. Apple company, as a worldwide famous technology enterprise, experiences risks of uncertainties. The objective of this research is to combine behavioral economics and corporate operational risk theories from an interdisciplinary perspective and evaluate their applied values in risk management and their real meanings. This research mainly discusses how behavioral economics affects decision-making in Apple’s management of its operational risks. To make this research reliable and convincing, it is necessary to provide empirical evidence of Apple’s real-time decision-making case in the past two years. Furthermore, Apple’s supply chain management, product pricing, and consumers’ psychological behaviors will be identified in the process of its actual business strategies and decision-making by emphasizing some cognitive biases, like loss aversion, anchoring effect, endowment effects and so on. The research results reveal that apart from effectively discovering internal decision-making biases in enterprises, behavioral economics is also a strategic tool to support enterprises in decision-making in a highly complex global competition, and improve their risk resilience and strategic adaptability. It also shows the strategic value of behavioral economics in the complex global market.