Zhang S J, C Y Q F Y C (2013) Risk attitude of Chinese contractors in bid/no bid decision-making of international projects: A preliminary study. In: Smith, S D and Ahiaga-Dagbui, D D (eds.) Proceedings of 29th Annual ARCOM Conference, 2-4 September 2013, Reading, UK.
Abstract
Decision-makers' attitude towards risk plays a critical role in the bid/no bid decision of international projects. As a descriptive model of decision making under uncertainty and risk, cumulative prospect theory (CPT) proposed a distinctive fourfold pattern of risk attitude. According to the CPT, the fundamental goal of this research is to explore the risk attitude of Chinese contractors in bid/no bid decision process of international projects. The research is also devoted to answer the question whether the risk attitude of Chinese decision-makers in international construction firms is consistent with the conclusions in CPT. An experiment based on Tversky and Kahneman’s CPT research in 1992 was conducted. With limited source of Chinese contractors subjects, this research conducted a preliminary study on 48 post-graduates majoring in construction management in Tianjin University. Thirty five valid data were eventually obtained. Multivariate statistical analysis indicated that: 1) the risk attitude of Chinese contractors in bid/no bid decision-making of international projects accords with the fourfold pattern, the same in CPT; 2) all the parameters are less than 1, in accord with diminishing sensitivity in CPT; 3) when bidding international projects, the tendency of Chinese contractors to take high-risk projects for losses with moderate and high probabilities is higher than that to avoid risk for gains. The results show that the application of CPT should take different cultures and situations into consideration and this research also benefits contractors to make reasonable and proper bid/no bid strategies.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | bidding; contractor; cumulative prospect theory; international project; risk attitude |
| Index terms: | bid/no-bid, bidding, prospect theory, international project, international construction, multivariate statistical analysis, decision-making, experiment, decision process, strategy, risk attitude |
| Subjects: | decision-making and reasoning, management, statistical analysis, decision analysis, data collection methods, strategic management, economic analysis, bidding |
| Topics: | International Construction, Research Practice, Business Strategy, Procurement, Risk Management |
| Descriptive scope: | 5 PCTEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here