Contractor’s Risk Attitudes in the Selection of International Construction Projects
Publication: Journal of Construction Engineering and Management
Volume 131, Issue 3
Abstract
International construction involves all of the uncertainties common to domestic construction projects as well as risks specific to international transactions. Consequently, despite the worldwide trend toward globalization, a very small portion of contractors actively seek international contracts due to concerns of probable failures. This paper describes findings from experiments done to investigate the risk attitude and bid decision behavior in the selection of international projects. The participants demonstrated either weak risk seeking in profit situations or strong risk seeking toward loss situations when choosing between conflicting options of risky opportunities and sure payoffs. On the other hand, another experimental test attempting to investigate bid behavior when making a realistic bid or no-bid decision in a complicated international construction project reveals the prevailing risk aversion. Further, this paper finds the experimental supports for some of the errors and biases due to risk attitude that commonly exist in bid decisions in this area. Finally, we present lessons learned and guidelines to make a qualified bid decision through feedback with the participants.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 131 • Issue 3 • March 2005
Pages: 283 - 292
Copyright
© 2005 ASCE.
History
Received: Jul 1, 2003
Accepted: Jun 10, 2004
Published online: Mar 1, 2005
Published in print: Mar 2005
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