A Comparison of Models Describing the Impact of Moral Decision Making on Investment Decisions |
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Authors: | Eva Hofmann Erik Hoelzl Erich Kirchler |
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Institution: | (1) University of Vienna, Universitaetsstrasse 7, 1010 Vienna, Austria |
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Abstract: | As moral decision making in financial markets incorporates moral considerations into investment decisions, some rational decision
theorists argue that moral considerations would introduce inefficiency to investment decisions. However, market demand for
socially responsible investment is increasing, suggesting that investment decisions are influenced by both financial and moral
considerations. Several models can be applied to explain moral behavior. We test the suitability of (a) multiple attribute
utility theory (MAUT), (b) theory of planned behavior, and (c) issue-contingent model of ethical decision making in organizations.
In an experimental setting, 141 participants traded company shares in a computerized asset market. Over 12 periods, companies
varied in morality (i.e., treatment of employees) and in profitability (i.e., expected dividends per share). 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. |
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Keywords: | ethics decision theory behavioral economics |
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