HOUSEHOLD BARGAINING, FINANCIAL DECISION-MAKING AND RISK TOLERANCE
Abstract
This study examines the financial investment decision-making and risk behaviors of
Malaysian men and women. It uses data obtained from a survey of employed Malaysians to
test two opposing models of household decision making, the income pooling hypothesis and
the bargaining model. Ordinal probit regressions are estimated to determine if earning share
affects decisions on financial investments, and to identify factors that affect risk tolerance of
men and women. The results indicate that although both men and women practice autonomy
in decisions related to financial investments, women have lower risk tolerance than men.
The results on decision making are consistent with the bargaining model as reflected in the
importance of relative earning share in financial decision making.
Keywords: Malaysia; Income Pooling Hypothesis; Bargaining Model; Financial Decision-
Making; Risk Tolerance; Household.
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