EXPECTED UTILITY THEORY AND INVESTMENT CHOICES IN THE NIGERIAN CAPITAL MARKET

This study aims to empirically test the expected utility theory in the Nigerian capital, determine its effect on investment decision choices and ascertain the risk tolerance level of Nigerian investors. Primary data obtained from questionnaires administered on 441 investors in the Nigerian capital market sampled using a
two-stage sampling technique were analysed using the Satterthwaite Welch F-test, the one-way ANOVA Ftest, the Welch F-test, the chi-square technique and the Grabble and Lytton (1999) risk tolerance assessment model.Evidences from the Nigerian capital market do not support the expected utility theory. Further results show thatthere exists a statistical difference between expected and actual utilities from investments in Nigeria, and investors in the Nigerian capital market are risk neutral.