ABSTRACT
Economists of every persuasion agree that investment is important as a source of employment and as a foundation for future growth. Economists have been concerned to explain behavior in response to risk for many years, looking for reasons why otherwise similar households adopt different ways of managing risk. Economists have two principal reasons to study investment decisions. The first is that public and private investment decisions affect a substantial part of any developed country's GDP and have a profound effect on the future income of individuals and the welfare of society at large. The second is to establish their role as the theoreticians behind business education and so enjoy their share of the income streams generated by postgraduate management education. Investment committees inside corporations will be aware that, should any project that they support return less than the projected return on equity, this will tend to reduce the overall return on equity, upsetting the company's investors.
