A Comparison of Models Describing the Impact of Moral Decision Making on Investment Decisions

37 Pages Posted: 20 Sep 2005

See all articles by Eva B. Hofmann

Eva B. Hofmann

University of Vienna

Erik Hoelzl

University of Cologne

Erich Kirchler

University of Vienna - Faculty of Psychology

Date Written: August 30, 2005

Abstract

Some rational decision theorists argue that moral considerations would introduce inefficiency to investment decisions. However, market demand for socially responsible investment is increasing. We test the suitability of (a) multiple attribute utility theory, (b) theory of planned behavior, and (c) issue-contingent model of ethical decision making in organizations to explain socially responsible investment behavior. In an experimental setting, 141 participants traded company shares on a computerized asset market. Over 12 periods, companies varied in morality and in profitability. Participants' bids and asks for shares were recorded. Results indicate that moral considerations influence investment decisions, controlling for profit. Differences between the three models are discussed.

Keywords: ethics, decision theory, behavioral finance

JEL Classification: D14, G11, M14

Suggested Citation

Hofmann, Eva B. and Hoelzl, Erik and Kirchler, Erich, A Comparison of Models Describing the Impact of Moral Decision Making on Investment Decisions (August 30, 2005). Available at SSRN: https://ssrn.com/abstract=804384 or http://dx.doi.org/10.2139/ssrn.804384

Eva B. Hofmann (Contact Author)

University of Vienna ( email )

Christies gate 12
Bergen, 5015
Austria
00431427747336 (Phone)

HOME PAGE: http://homepage.univie.ac.at/eva.hofmann/

Erik Hoelzl

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Erich Kirchler

University of Vienna - Faculty of Psychology ( email )

Universitaetsstrasse 7
Vienna, A-1010
Austria
+43 1 42 7747332 (Phone)
+43 1 42 7747339 (Fax)

HOME PAGE: http://homepage.univie.ac.at/erich.kirchler

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