Study Of The Impact Of Risk Perception And Risk Propensity On Bidding Decision Of International Engineering Contracting Enterprises

Making the right bidding decision is practically meaningful to the income anddevelopment of international engineering contracting enterprises. Traditional studingtools for decision making have focused on the establishment of bidding decisionsupporting system with mathematic approaches, which ignore the impact on biddingdecision by decision makers’ personal characteristics, so it is a beneficial complimentto study the bidding decision from the angle of risk perception and risk propensity ofdecision makers.A conceptual model was established through literature review, where themagnitude and variability of potential gain/loss were chosen as the factors influencingrisk perception, and the outcome history as factor influencing risk propensity. Anexperiment was designed in the background of bidding projects selection by a certaininternational engineering contracting enterprise, where the magnitude and variabilityof potential gain/loss and outcome history were manipulated, and the risk perception,risk propensity and bidding decision behavior were observed.7hypotheses werebrought forward to explore the relationship among risk perception, risk propensity andbidding decision behavior, and how the risk perception and risk propensity wereinfluenced in the background of bidding decision. Experimental questionnaires weredistributed to people with the background of construction management theory andpractice, and135valid questionnaires were gained. Findings through multi-statisticsanalysis showed that: risk perception have a negative impact on bidding decisionbehavior, and risk propensity have a positive impact on bidding decision behavior;outcome history have a significant impact on risk propensity; the magnitude andvariability of potential gain/loss both have significant impact on risk perception, andthe variability plays a more important role; risk propensity can to some extent explainthe change in risk perception, while the direction of explanation changes with thevariation of risk perception. The experimental data also showed that students aresuitable participants for experiments which are related to basic thinking and decisionmaking process of human beings.