Work

The Effect of Straight-Line and Accelerated Depreciation Rules on Risky Investment Decisions—An Experimental Study

Year: 2016

Type: article

Abstract: The aim of this study is to analyze how depreciation rules influence the decision behavior of investors. For this purpose, we conduct a laboratory experiment in which participants decide on the composition of an asset portfolio in different choice situations. Using an experimental setting with different payment periods, we show that accelerated compared to straight-line depreciation can increase the willingness to invest as hypothesized by theory. However, this expected behavior is only observed in a more complex environment (with a subsidy) and not in a less complex environment (without a subsidy).

Source: International Journal of Financial Studies

DOI: 10.3390/ijfs4040019

Authors: Hagen Ackermann, Martin Fochmann, Nadja Wolf

Institutions: Otto-von-Guericke-Universität Magdeburg, University of Cologne, Leibniz University Hannover

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $2,172

OpenAlex ID: W1503962136

FWCI: 1.154

Cites: 51

Cited by: 17

Related to: 10