Evaluating more often: how monitoring changes risk-taking
A dashboard does not merely change what a manager knows: it can change how that manager assesses a loss. The managerial question is specific: should every interim result become an opportunity to reconsider commitment to a risky project?
What the literature establishes
Shlomo Benartzi and Richard H. Thaler (1995, The Quarterly Journal of Economics) propose an explanation of the equity premium based on myopic loss aversion. Their model combines heightened sensitivity to losses with frequent evaluation of results: unfavourable short-term fluctuations can then weigh heavily in the assessment of a long-term investment. This is a model-based explanation of a financial phenomenon, not proof that all frequent monitoring impairs decisions.
When the evaluation schedule changes the choice
Richard H. Thaler, Amos Tversky, Daniel Kahneman and Alan Schwartz (1997, The Quarterly Journal of Economics) test this mechanism in an investment decision experiment. Participants exposed to the most frequent evaluations take less risk than those whose results are evaluated in a more aggregated form. The experiment thus indicates that the way results are sequenced and presented can alter the chosen allocation without making the investment opportunities intrinsically better or worse.
The premature conclusion
One might conclude that reviews should be spaced further apart to encourage bolder choices. That would confuse increased risk-taking with better decision-making. The more cautious implication is to distinguish monitoring critical signals from reassessing the economic case for a commitment: these activities do not necessarily require the same schedule. (our executive and employee training programmes)
What the evidence cannot determine
These studies do not establish an optimal review frequency for a medtech project, a higher education partnership or an international sporting initiative. An investment experiment reproduces neither safety obligations nor the arrival of new information that may require immediate intervention. With everyday dashboards, the risk is instead that every variation becomes a reason to reconsider a decision, without distinguishing expected fluctuations from substantive changes.
A practical check in Lausanne
As part of SHR's decision-making programme, an exercise in Lausanne could focus on a medtech project, a collaboration with a higher education institution, an international sports federation initiative or an investment by a scale-up in the Lake Geneva region. Before a monitoring cycle, the team defines the alerts requiring immediate intervention and the date for reviewing its commitment, then records every proposed change and its rationale. At the review date, it calculates the proportion of proposals prompted solely by an interim fluctuation, with neither an alert threshold crossed nor new information about the project's assumptions. This measure describes how sensitive reconsideration is to monitoring; it does not prove that less frequent reviews would improve outcomes. To go further: explore the Decision-making training in Lausanne, or browse our executive and employee training programmes in Switzerland.
In pictures: Decision-making in Lausanne
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