Experiment on individual investment decision making process

Abstract

The inquiry into the investment behaviour of individuals through experi mental data provided a good insight. The importance of combination of variance and skewness in determining the risk perception of individuals was suggested by the analysis of data generated. The influence of skewness on the decision process implies that investors may be interested in minimizing mnximum loss. The behaviour of the participants is well explained by the adjusted logarithmic and adjusted power functions with low values of the coefficient of power. The rejection of quadratic utility function was consistent with the evidence that higher moments also played a role in the decision making process of individuals.