Kartin, Ang Prisila and Murniati, Monika Palupi (2018) RESPONSIBILITY ON RISKY CHOICE: FRAMING EFFECT ON INVESTMENT DECISION MAKING OF INDIVIDUAL WITHIN THE GROUP. South East Asia Journal of Contemporary Business, Economics and Law, Vol. 16, Issue 1(August), 16 (1). pp. 6-11. ISSN ISSN 2289-1560

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Abstract

Management requires data and information as the basis of consideration in decision making. Several decision-making alternatives and its impacts also affect individual's decision making. The effect of framing occurs when a problem/information/choice presented in a particular framing can affect an individual's perception of a problem/choice that will influence an individual's decision making. Previous research divided framing into positive and negative domain. There are several factors other than framing that affect group decision making. Responsibility has an important role in individual decision making within the group. Several economics studies find evidences that individuals decrease their preference for risky choices when they are responsible for other people’s outcomes. We investigate the effect of responsibility on risky choice by doing experiment. In this experiment, we empirically analize the differences of investment decision making between individuals who have responsibility within the group with individuals who have no responsibility within the group when information is presented in either positive or negative framing. 95 participants divided into four groups with different levels of framing and responsibility. This research uses One Way Anova to test whether there are differences in investment decision making between groups. Our experimental results show that responsibility affect risky decision-making preferences, when individuals responsible for group’s risky choice, they tend to be more cautious and have lower risk preferences in both positive and negative framing. However, individuals who have no responsibility within the group show a higher risk preference on negative framing rather than positive framing, this finding in line with prospect theory

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