Global risk, Effort, and Emotions in an Investment Experiment
نویسندگان
چکیده
This paper experimentally investigates investment behavior. We find that global risk – i.e. risk independent of an agent’s investment decision (like political risk) – substantially decreases investment. Also, if the capital used for investment is based on previous earnings (effort) instead of an endowment, investment decreases substantially. These results are neither in line with expected utility theory nor with some alternative theories of decision making under risk (like prospect theory or regret theory). We offer an explanation that takes the role of experienced and anticipated emotions into account. In addition, an emotion-based explanation is provided for related experimental findings concerning the common ratio effect. This version: August 2001
منابع مشابه
Anticipated and Experienced Emotions in an Investment Experiment
This paper experimentally investigates investment behavior. We find that global risk – i.e. risk independent of an agent’s investment decision (like political risk) – substantially decreases investment. Also effort to obtain the capital used for investment decreases investment substantially. These results are neither in line with expected utility theory nor with psychologically orientated theor...
متن کاملComputerized Linking of Capital Markets - A Viable Approach
Interlinking capital markets has always been an interesting issue since it not only provides more investment opportunities but also results in reduction of the risk of market volatility due to increase in the size of market. However, global and local barriers like different currencies, legal issues, settlement risks and costs prevent such interlink age to take place efficiently. In this paper, ...
متن کاملInvestment, Resolution of Risk, and the Role of Affect
This experimental study is concerned with the impact of the timing of the resolution of risk on people’s willingness to take risks, with a special focus on the role of affect. While the importance of anticipatory emotions has so far been only inferred from decisions regarding hypothetical choice problems, we had participants put their own money at risk in a real investment task. Moreover, emoti...
متن کاملمطالعه خطرات ژئوپلیتیک جهانی در سیاستها و مدیریت اقتصادی نظام جمهوری اسلامی ایران
In this paper, we examine the global geopolitical shocks and dangers (the United States of America) and play an important role in economic policies and economic management in the Islamic Republic of Iran. We estimated the variance of structural models for the country. The results indicate that political geopolitical shocks explain the unparalleled contribution of the variety of production to th...
متن کاملThe Country Risks and Foreign Direct Investment (FDI)
T he importance of foreign direct investment (FDI) in developing countries has begun to spread very rapidly, especially after the transition of command economies countries into open markets. Many countries see attracting FDI as an important element in their strategy for economic growth because FDI is widely regarded as an amalgamation of capital, technology, marketing, and management...
متن کامل