Fourfold pattern of risk preferences — the cognitive signature observed in GC sales conversations

Claim: Combining the value function (concave gains, convex losses, asymmetric slope) with the inverse-S probability-weighting function ([[tversky-kahneman-1992-probability-weighting-certainty-effect]]) yields the fourfold pattern of risk preferences:

• Moderate-to-high probability gains → risk-averse (prefer a sure $80 to an 80% chance of $100)
• Moderate-to-high probability losses → risk-seeking (prefer an 80% chance of losing $100 to a sure loss of $80)
• Low-probability gains → risk-seeking (lottery tickets)
• Low-probability losses → risk-averse (insurance)

Source: Tversky & Kahneman 1992; consistent across decades of replication.

Confidence: Verified.

For Candid — what we actually see: A GC offered a marketing investment with moderate probability of meaningful upside resists (cell 1: risk-averse over moderate-probability gain). The same GC, three months into a failing in-house website build, throws another month at it rather than write off the loss (cell 2: risk-seeking over moderate-probability loss — the sunk-cost trap, mechanically driven by the convex loss limb). These are the two cells of the fourfold pattern Candid sees most often. Both are predicted by the theory; both are the empirical signature of prospect-theoretic cognition.

Implication: Pitches must (a) anchor on certain rather than probable upside ([[rule-lead-with-certain-deliverable-not-probable-outcome]]) to defeat cell 1, and (b) provide explicit kill criteria ([[rule-engineer-explicit-kill-criteria-into-engagements]]) so engagements don't become future cell-2 sunk-cost traps for the GC.