Risk, Fit, and the Hiring Decision: A Prospect Theory Perspective on Skilled Migrant Assessment

This study examines how hiring decisions involving skilled migrants are shaped under conditions of uncertainty and why highly qualified migrants remain underutilised in host labour markets. Drawing on prospect theory and qualitative data from 105 Asian skilled migrants and 24 Australian recruiters, we analyse how decision‐makers evaluate and respond to perceived recruitment risks. The findings show that recruiters tend to rely on short‐term, reference‐dependent evaluations, prioritising immediate “fit” and minimising uncertainty, while skilled migrants approach employment decisions as longer‐term investments, often accepting initial underemployment as a strategic pathway. This mismatch in decision frames leads to divergent interpretations of the same candidate attributes and contributes to persistent underutilisation of skills. By unpacking the micro‐level mechanisms of framing, reference points, and risk behaviour, the study advances the selection and assessment literature beyond static notions of bias and fit. By revealing how differing decision frames shape hiring outcomes, the study contributes a new perspective on skilled migrant assessment, and highlights the value of prospect theory for understanding recruitment decisions under uncertainty.