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Effects of Portfolio Planning Methods on Decision Making: Experimental Results

  • JS Armstrong

    (The Wharton School - University of Pennsylvania)

  • Roderick J. Brodie

    (Department of Marketing, University of Auckland,)

Subjects (n = 1015) working individually in the role of managers were asked to choose between investment opportunities that would either double their investment or cause the loss of half of it. Six administrators ran experiments on 27 occasions in six countries over a five-year period. Information about the BCG matrix increased the subjects' likelihood of selecting the project that was clearly less profitable. Of subjects exposed to the BCG matrix, 64% selected the unprofitable investment. Of subjects who used the BCG matrix in their analysis, 87% selected the less profitable investment.

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File URL: http://econwpa.repec.org/eps/get/papers/0412/0412016.pdf
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Paper provided by EconWPA in its series General Economics and Teaching with number 0412016.

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Length: 12 pages
Date of creation: 06 Dec 2004
Date of revision:
Handle: RePEc:wpa:wuwpgt:0412016
Note: Type of Document - pdf; pages: 12
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Arkes, Hal R. & Dawes, Robyn M. & Christensen, Caryn, 1986. "Factors influencing the use of a decision rule in a probabilistic task," Organizational Behavior and Human Decision Processes, Elsevier, vol. 37(1), pages 93-110, February.
  2. Arkes, Hal R. & Blumer, Catherine, 1985. "The psychology of sunk cost," Organizational Behavior and Human Decision Processes, Elsevier, vol. 35(1), pages 124-140, February.
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