Risky Decisions And Other-Regarding Decision In Investment Setting

We can take society as an organic combination of individuals and behaviors of individual. The study about how people make decisions is the important starting point of studys about many social economic problems. Based on the assumption of "economic man", the economic theory could provide ideas to the analysis and forecasting about behaviors of people. However people’s actual behaviors varies much and often deviate from the way those theory have predicted. Behavioral economics, as a branch of economics, is paying attention to people’s "irrational" behavior, and with doing experiments as its important method. Simple laboratory expeiments like the Ultimatum Game and the Trust Game, which contain social preferences, have gotten a lot of regular results which give birth to many different theories, to enrich our understanding and interpretation of human behaviors like trust, risk, altruism etc. This paper is just based on the learning and exploring in this area.In the process of the pursuit for the development of economy, economic concepts like investment and risk permeate in every nook and cranny of our life, but concepts like trust and altruistic which are indispensable elements for human solidarity and social progress seem lost. Are investment and risk crowding out trust and altruistic? This paper tries to distinguish people’s awareness and reaction in between altruism background and risky backgrounds, to test the differences among people’s decisions in different situations which are risky or altruistic, and to test the existence of carry-over effect. We introduce risky situations and altruistic situation by setting of different types of responders as well as the mechanism about investment return of money sending by senders in the traditional Trust/Investment Game. Riskless mechanism and affirmable responder’s behaviour constitute a kind of altruism investment situation, risky mechanism and uncertain responder’s behaviour constitute the other three investment situations with different degree of complication of risk. Further, we try to test carry-over effect between risky situations and altruistic situation through two experiments which are different in the order of investment situations. We considered different samples of Chinese students, Malaysian students and British students to try to control the cultural difference. The experiment process is that:unified introduction of background and rules of this investment game, dividing the testees into two groups randomly to two rooms, directing two groups respectively complete the decision-making orderly according to investment situations, recycling the decision information and computing payment. Accordingly we have conducted five experiments:Chinese students ordered group, the Chinese students reverse ordered group, Malaysia students ordered group, Malaysia students reverse ordered group and the British students ordered group, the number of testees are26,20,20,20,14respectively in each group.We use functions in excel file and statistical analysis software SPSS to sort the experiments data, and made the descriptive analysis, comparative analysis, non-parameter test and regression analysis. First, we get a result which is similar with results of many experimental reseachs with Trust/Investment Game:senders taking up a significant proportion are not "rational economic man", they make a different decision-making from the sub-game refined equilibrium result predicted by game theory--investing an amount greater than zero. More important is that in our specific investment background, we find no special cultural differences and gender differences, but for different investment situation people’s decisions are significantly different, and different samples present similar features. We can see that participants overall showed altruism or generous to some extent, and there exist kind of carry-over effect from decision-making in risk situations on in altruism situation and from the opposite direction.