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When the stress of quitting meets the cost of playing: An Experiment on to quit or not to quit?

  • Schade, Christian
  • Snir, Avichai
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    Business-owners often postpone disinvestment decisions even when future profits are not expected to compensate for current losses. We use an experiment to study one possible behavioral motivation. Studies in psychology suggest that making decisions is stressful and, consequently, many people prefer to buck-pass their decisions to someone else or to postpone them to future periods. Other people, however, are vigilant subjects that are able to make efficient decisions. In our experiment, we measure subjects’ buck-passing, vigilance and risk-aversion traits and study their performance in games in which they have to make investment and disinvestment decisions. We find that the number of rounds most subjects play is greater than the number expected by real-option theory but that vigilant and risk-averse subjects tend to make decisions that are more efficient than all other subjects, that vigilant but not risk-averse subjects tend to shirk making the investment decisions and that buck-passing and not risk-averse subjects tend to postpone their disinvestment decisions even when they make losses that would have induced most other subjects to disinvest. Unternehmer sind dafür bekannt, Desinvestitionsentscheidungen zu verschieben, auch wenn die Erwartung über zukünftige Gewinne nicht ausreicht, um die derzeitigen Verluste zu kompensieren. Wir führen eine experimentelle Studie durch, um einen möglichen Treiber dieses Verhaltens besser zu verstehen. Psychologische Studien zeigen, dass das Treffen von Entscheidungen mit Stress verbunden sein kann, und dass viele Menschen daher eine Neigung haben, entweder andere ihre Entscheidungen treffen zu lassen oder diese auf zukünftige Perioden zu verschieben. Andere Personen sind dagegen wachsam und dazu in der Lage, effizient zu entscheiden. In unserem Experiment messen wir die Tendenz von Personen, ihre Entscheidungen zu verschieben bzw. wachsam zu sein sowie deren Risikobereitschaft und beobachten, wie gut diese in Spielen abschneiden, in denen sie Investitions- und Desinvestitionsentscheidungen treffen müssen. Unsere Ergebnisse zeigen, dass die meisten Personen mehr Runden spielen, als dies auf Basis der Realoptionstheorie erklärt werden kann, dass aber zugleich wachsame und risikoaverse Personen Entscheidungen treffen, die näher an eine effiziente Entscheidung herankommen als die anderer Personen. Wir zeigen weiterhin, dass wachsame, aber nicht risikoaverse Personen dazu neigen, die Investitionsentscheidung gar nicht erst zu treffen (d.h., die Teilnahme an dem Spiel zu vermeiden), und dass verschiebende und nicht risikoaverse Personen dazu neigen, ihre Desinvestitionsentscheidungen auch dann spät zu treffen, wenn sie Verluste machen, bei denen andere längst mit dem Spiel aufgehört hätten.

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    File URL: http://purl.umn.edu/134426
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    Paper provided by Humboldt University Berlin, Department of Agricultural Economics in its series Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers with number 134426.

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    Date of creation: Sep 2012
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    Handle: RePEc:ags:huscpw:134426
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    9. Sandri, Serena & Schade, Christian & Mußhoff, Oliver & Odening, Martin, 2010. "Holding on for too long? An experimental study on inertia in entrepreneurs' and non-entrepreneurs' disinvestment choices," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 30-44, October.
    10. Brennan, Michael J & Schwartz, Eduardo S, 1985. "Evaluating Natural Resource Investments," The Journal of Business, University of Chicago Press, vol. 58(2), pages 135-57, April.
    11. Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1149-1187.
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