The Impact of Framing on Impact Investing

Impact investors are faced with the issue of risk and return evaluation on both the scale of financial performance and social performance. The study extends the understanding of the relationships between investor perception of risk, sense of understanding, and financial decision-making into the inherently dichotomous context of impact investment. Through the lens of prospect theory, an instrument for data collection was designed to evaluate the effects of finance outcome dominant, social outcome dominant, and hybrid outcome framing on an investor's perception of risk, sense of understanding, and capital allocation decisions. This research found that variability in outcome framing influences an investor's capital allocation decision but does not affect the perception of risk or sense of understanding. These findings contribute to the understanding of how the framing of compound outcomes with both financial and moral implications affects the decision-making choice process of individuals.