A preliminary exploration of the effects of rational factors and behavioral biases on the managerial choice to invest in corporate responsibility

Tal Shavit () and Avshalom M. Adam

Managerial and Decision Economics, 2011, vol. 32, issue 3, 205-213

Abstract: We explore a possible decision-making process in which mixes of rational and non‐rational factors affect the choice made by a firm's management to invest in corporate responsibility. We propose that the rational factors affecting the decision‐makers' investment choice are: (a) moral choice; (b) risk management; (c) consequential changes that would be required in corporate structure or production processes; and (d) long‐term versus short‐term considerations. The non‐rational behavioral biases that we suggest affecting the decision‐makers' investment choice are: (a) attitude to risk, (b) status quo bias, (c) subjective discounting, and (d) myopic loss‐aversion. Copyright (C) 2011 John Wiley & Sons, Ltd.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:32:y:2011:i:3:p:205-213

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