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2005
- handle: 10670/1.yms163
- 1405-3543
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Revista Internacional de Ciencias Sociales y Humanidades, SOCIOTAM
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Arvind Ashta, « Psychology and risky decision process for corporate investments », Revista Internacional de Ciencias Sociales y Humanidades, SOCIOTAM, ID : 10670/1.yms163
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Résumé
"This paper looks at the role of psychology in therisky decision process for corporate investments. Theinfluence of psychology is found in assessing the riskused in calculating the discount rate. The concepts reviewedinclude notions of time, impatience, innertempo, future or past orientation, addiction, life expectancy,monetary illusion, loss aversion, risk aversion,stress, personality type, adverse selection, anddifferent types of myopia. So, even numbers used forevaluating the project are subjective. Thereafter, thedecision made on these numbers is also influenced bypsychology.Concepts reviewed for the risky decision makingincluded certainty preference, loss aversion, framing,anchoring, endowments, cluster-attraction, confidenceor hubris, past orientation, herd behaviour, useof heuristics, and incentives. Studying the influence ofsubjectivity is essentially useful for the manager to beaware of how he may make erroneous forecasts of expectationsand risks and erroneous decisions"