Decisions on strategic markets -- An experimental study

This paper analyses the decision behaviour of college students of business and economics and of professional business managers, in relation to a decision problem. Three data sets are obtained: a combined set from the universities of Munich and Aarhus, one from the Aarhus School of Business, and one created from the population of the 2800 largest companies in Denmark. The three data sets are used to test game theoretical models of decision making behaviour and to propose an alternative model of the behaviour, using a number of explanatory variables relating to the decision maker. The results show that traditional game theory is not sufficient to explain the given responses and that the decisions are clearly related to a number of personal factors such as self-evaluation, intellectual level, educational background and experience. The material distinguishes two types of decision makers: the entrepreneur and the bureaucrat. The entrepreneur has low risk aversion and is willing to gamble, while the bureaucrat almost always chooses maximin strategies. The empirical material from companies shows a significant relationship between company performance and the behaviour of decision makers in the company: both equity ratio and profit rate are negatively related to the propensity to choose a pure maximin strategy.