Prospect Theory in the financial decision-making process. An empirical study of two Argentine Universities

LIMA

Conferencia; International Finance Conference 2021; 2021

UNIVERSIDAD DEL PACIFICO

The purpose of this research is to provide empirical evidence of the use of the Prospect Theory basic assumptions in the Argentine context. Particularly, we analyze the financial decision-making process in students of the economic-administrative academic area of two Universities, one public the National University of Cordoba (UNC), and one private, the Catholic University of Cordoba (UCC), both in the city of Cordoba, Argentina.The analysis methodology includes first the descriptive statistical analysis to identify the presence of the effects of: certainty, reflection and isolation, contemplated in the Prospect Theory, and the construction of a series of indicators on the application of the same in the taking of financial decisions; secondly the independence test 2, to determine if the decisions made are independent of the degree course taken; then the non-parametric Kruskal-Wallis test, to determine if the decisions made by individuals vary according to the semesters taken or the levels of progress in the training of students; and finally the non-parametric Mann-Whitney test, to determine if there are differences between the decisions made by men and women.The empirical results of this research provide evidence on the effects of certainty, reflection and isolation in the educational programs offered in both universities in the economic and administrative areas, which leads to the conclusion that the study participants make financial decisions in situations of uncertainty based on more in Prospect Theory than in Expected Utility Theory. Additionally, there is no relationship between the decisions made by the students under study and the study program followed.On the other hand, the results of statistics tests show that in terms of statistical significance, the decisions made are independent of the degree course taken and according to the semester attended by the individuals or considering the level of advancement in their program of studies. Respect to analyze for gender, we confirm that the risk profile posed the women are more conservative than men, however, in line with our previous research in other Latin-American countries, the results show we found evidence of a more aggressive profile in the losses terrain.