A lab test on the decision not to decide

Christian D. Schade () and Avichai Snir ()
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Christian D. Schade: Humboldt-Universität Zu Berlin
Avichai Snir: Netanya Academic College

Business Research, 2020, vol. 13, issue 3, No 16, 1253-1291

Abstract: Abstract Decisions are often postponed even when future profits are not expected to compensate for the losses. This is especially relevant for financial and entrepreneurial disinvestment choices, as investors often have a disposition to hold on to losing assets for too long. We use an experiment with real real-options to study one possible behavioral motivation. Studies in psychology suggest that individuals have different styles of handling the stress involved in making decisions. We find that participants' styles of decision-making and risk aversion as well as the interaction of those can assist in predicting the likelihood that the participants will make investments and the timing of their disinvestment decisions. We also find the overall structure of the findings to be in line with a planner–doer model.

Keywords: Buck-passing; Conflict theory of decision-making; Disinvestment decisions; Financial decisions; Player types; Real monetary-stakes experiment; Risk aversion; Vigilance; Planner–doer model (search for similar items in EconPapers)
JEL-codes: D03 D81 L26 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s40685-020-00116-y

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