The Effect of Straight-Line and Accelerated Depreciation Rules on Risky Investment Decisions—An Experimental Study

Abstract

Abstract:The aim of this study is to analyze how depreciation rules influence the decision behavior of investors. For this purpose, we conduct a laboratory experiment in which participants decide on the composition of an asset portfolio in different choice situations. Using an experimental setting with different payment periods, we show that accelerated compared to straight-line depreciation can increase the willingness to invest as hypothesized by theory. However, this expected behavior is only observed in a more complex environment (with a subsidy) and not in a less complex environment (without a subsidy).

Optimal Treatment Combination for Dishwashing Liquid Soap based on Waste Cooking Oil According to The Requirement of Indonesian Quality Standards

“…Production is assumed to be made by FWET so it does not require labor costs. The depreciation value of the tool uses the straight-line method 29) with a lifetime of about 5 years.…”