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A role-game laboratory experiment on the influence of country prospects reports on investment decisions in two artificial organizational settings

Marco Castellani, Linda Alengoz, Niccolò Casnici and Flaminio Squazzoni ()
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Marco Castellani: University of Brescia
Linda Alengoz: University of Brescia
Niccolò Casnici: University of Brescia
Flaminio Squazzoni: University of Milan

Mind & Society: Cognitive Studies in Economics and Social Sciences, 2022, vol. 21, issue 1, No 8, 149 pages

Abstract: Abstract This paper investigates how reports concerning a given country’s prospects affect investment decisions in two stylized, artificial organizational settings. We designed a role-game laboratory experiment, where subjects were asked to make investment decisions for two types of fictitious companies from the same country. We found that when available reports included positive country prospects, subjects strategized more on investments regardless of the characteristics of their organization. When reports included negative prospects, however, certain organizational peculiarities influenced the subjects’ interpretations, with decision-makers opting for more prudent plans when managing a more traditional company. Cognitive maps of decision makers showed that subjects considered investment strategies as a means to fulfil a company’s role expectations regarding appropriate decisions. Notwithstanding all caveats due to the artificial and simplified nature of our experimental setting, our findings indicate the need for more research on the effect of reports and prospect analysis on strategic decisions of companies, especially when business prospects are uncertain.

Keywords: Investment decisions; Companies; Organizational settings; Cognitive maps; Lab experiment (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11299-021-00283-3

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