Journal articles: 'Behavioral economics, experimental economics, risk-taking'

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Zhong, Songfa, Soo Hong Chew, Eric Set, Junsen Zhang, Hong Xue, Pak C. Sham, Richard P. Ebstein, and Salomon Israel. "The Heritability of Attitude Toward Economic Risk." Twin Research and Human Genetics 12, no. 1 (February 1, 2009): 103–7. http://dx.doi.org/10.1375/twin.12.1.103.

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AbstractThe propensity to take risk underpins a wide variety of decision-making behavior, ranging from common ones such as asking for directions and trying out a new restaurant to more substantial economic decisions involving, for instance, one's investment or career. Despite the fundamental role of risk attitude in the economy, its genetic basis remains unknown. Using an experimental economics protocol combined with a classical twin strategy, we provide the first direct evidence of the heritability of economic risk attitude, at 57%. We do not find a significant role for shared environmental effects, a common observation in behavioral genetics that is contrary to commonly held views in economics. Our findings complement recent neuroeconomic studies in enhancing the understanding of the neurobiological basis of risk taking.

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Barberis, Nicholas C. "Thirty Years of Prospect Theory in Economics: A Review and Assessment." Journal of Economic Perspectives 27, no. 1 (February 1, 2013): 173–96. http://dx.doi.org/10.1257/jep.27.1.173.

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In 1979, Daniel Kahneman and Amos Tversky, published a paper in Econometrica titled “Prospect Theory: An Analysis of Decision under Risk.” The paper presented a new model of risk attitudes called “prospect theory,” which elegantly captured the experimental evidence on risk taking, including the documented violations of expected utility. More than 30 years later, prospect theory is still widely viewed as the best available description of how people evaluate risk in experimental settings. However, there are still relatively few well-known and broadly accepted applications of prospect theory in economics. One might be tempted to conclude that, even if prospect theory is an excellent description of behavior in experimental settings, it is less relevant outside the laboratory. In my view, this lesson would be incorrect. Over the past decade, researchers in the field of behavioral economics have put a lot of thought into how prospect theory should be applied in economic settings. This effort is bearing fruit. A significant body of theoretical work now incorporates the ideas in prospect theory into more traditional models of economic behavior, and a growing body of empirical work tests the predictions of these new theories. I am optimistic that some insights of prospect theory will eventually find a permanent and significant place in mainstream economic analysis.

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Cui, Pan, Xuanwen Liu, and Fenfang Lin. "An Experimental Analysis of Individual Irregularities Under the Temptation of Money: Network Simulation Interactive Platform Based on HTML5." Asian Business Research 4, no. 3 (October 8, 2019): 79. http://dx.doi.org/10.20849/abr.v4i3.689.

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Irregularities in economic activities are actually the result of mutual game between different stakeholders. This research combines psychology and experimental economics to analyze irregularities. This research is done on the HBuilder software platform, using HTML5 and other technologies. According to the Nash Equilibrium Theory, the behavioral trajectory of the participant is described. In the real incentive situation, the individual's decision-making behavior in the face of social dilemma is investigated. From the perspective of cost-benefit, the game characteristics of individual irregularities are analyzed. The exogenous punishment mechanism and the inherent personality trait are respectively Dimensions are explored. Experiment result shows: The exogenous punishment mechanism will have a significant inhibitory effect on individual irregularities. The level of risk appetite is related to gender and determines the individual's risk-taking tendency.

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TISDELL, CLEM. "LINKING POLICIES FOR BIODIVERSITY CONSERVATION WITH ADVANCES IN BEHAVIORAL ECONOMICS." Singapore Economic Review 50, spec01 (January 2005): 449–62. http://dx.doi.org/10.1142/s0217590805002141.

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Global biodiversity loss and its consequences for human welfare and sustainable development have become major concerns. Economists have, therefore, given increasing attention to the policy issues involved in the management of genetic resources. To do so, they often apply empirical methods developed in behavioral and experimental economics to estimate economic values placed on genetic resources. This trend away from almost exclusive dependence on axiomatic methods is welcomed. However, major valuation methods used in behavioral economics raise new scientific challenges. Possibly the most important of these include deficiencies in the knowledge of the public (and researchers) about genetic resources, implications for the formation of values of supplying information to focal individuals, and limits to rationality. These issues are explored for stated-preference techniques of valuation (e.g., contingent valuation) as well as revealed preference techniques, especially the travel cost method. They are illustrated by Australian and Asian examples. Taking into account behavioral and psychological models and empirical evidence, particular attention is given to how elicitation of preferences, and supply of information to individuals, influences their preferences about biodiversity. Policy consequences are outlined.

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Brock, J. Michelle, Andreas Lange, and Erkut Y. Ozbay. "Dictating the Risk: Experimental Evidence on Giving in Risky Environments." American Economic Review 103, no. 1 (February 1, 2013): 415–37. http://dx.doi.org/10.1257/aer.103.1.415.

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We study if and how social preferences extend to risky environments. We provide experimental evidence from different versions of dictator games with risky outcomes and establish that preferences that are exclusively based on ex post or on ex ante comparisons cannot generate the observed behavioral patterns. The more money decision-makers transfer in the standard dictator game, the more likely they are to equalize payoff chances under risk. Risk to the recipient does, however, generally decrease the transferred amount. Ultimately, a utility function with a combination of ex post and ex ante fairness concerns may best describe behavior. (JEL C72, D63, D64, D81)

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Lefebvre, Mathieu, and Ferdinand M. Vieider. "Risk taking of executives under different incentive contracts: Experimental evidence." Journal of Economic Behavior & Organization 97 (January 2014): 27–36. http://dx.doi.org/10.1016/j.jebo.2013.10.008.

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Bauer, Michal, Julie Chytilová, and Jonathan Morduch. "Behavioral Foundations of Microcredit: Experimental and Survey Evidence from Rural India." American Economic Review 102, no. 2 (April 1, 2012): 1118–39. http://dx.doi.org/10.1257/aer.102.2.1118.

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We use experimental measures of time discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit, a financial tool designed to reduce poverty and fix credit market imperfections. The evidence suggests that microcredit contracts may do more than reduce moral hazard and adverse selection by imposing new forms of discipline on borrowers. We find that, conditional on borrowing from any source, women with present-biased preferences are more likely than others to borrow through microcredit institutions. Another particular contribution of microcredit may thus be to provide helpful structure for borrowers seeking self-discipline. JEL: G21, I38, O15, O16, O18

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Carter, Michael, Ghada Elabed, and Elena Serfilippi. "Behavioral economic insights on index insurance design." Agricultural Finance Review 75, no. 1 (May 5, 2015): 8–18. http://dx.doi.org/10.1108/afr-03-2015-0013.

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Purpose – While behavioral economic experiments have uncovered a wealth of insights concerning how people decide in the face of risk and uncertainty, the implications of these insights for the demand for agricultural insurance are under-explored. The purpose of this paper is to report on results from two recent field experiments that measure the extent to which farmer behavior departs from the predictions of expected utility theory and derives the implications of these departures for insurance demand. Design/methodology/approach – Framed behavioral field experiments were played with random samples of West African Cotton farmers who lived in areas that were being incorporated into a cotton insurance pilot program. Findings – Substantial numbers of farmers depart from expected utility behavior in ways that predict excess sensitivity to uncovered basis risk in insurance contracts; and, the fact that insurance premiums are typically framed as certain and unavoidable, while benefits are unknown and stochastic. Originality/value – Using novel field experimental methods, the work summarized here indicates that more careful design of index insurance contracts in conformity with the findings of behavioral economics could result in larger contract uptake and, ultimately, larger development impacts.

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Veszteg, Róbert F., Kaori Yamakawa, Tetsuya Matsubayashi, and Michiko Ueda. "Acute stress does not affect economic behavior in the experimental laboratory." PLOS ONE 16, no. 1 (January 7, 2021): e0244881. http://dx.doi.org/10.1371/journal.pone.0244881.

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We report statistical results from a laboratory experiment in which participants were required to make decisions with monetary consequences in several solitary and interactive situations under acute stress. Our study follows the tradition of behavioral and experimental economics in selecting the experimental situations and incorporates elements from medical and psychological research in the way stress is induced and measured. It relies on a larger sample, with 192 volunteers, than previous studies to achieve higher statistical power. The main conclusion, drawn from binary comparisons between the treatment and reference groups, is that acute stress does not have a significant impact on cognitive skills, strategic sophistication, risk attitudes, altruism, cooperativeness, or nastiness. Regression analysis, controlling for psycho-social characteristics, corroborates these findings, while also suggesting that acute stress significantly decreases men’s risk aversion (as measured by a lottery-choice risk-elicitation task).

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Burakov, Dmitry. "Retesting the institutional memory hypothesis: An experimental study." Panoeconomicus 65, no. 4 (2018): 441–58. http://dx.doi.org/10.2298/pan160105003b.

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In this article, we set ourselves a task to test institutional memory hypothesis as a core of endogenous credit cycles. According to this hypothesis, risks taken by creditors depend largely on availability heuristic and experience of loan officers. To assess validity of this hypothesis we construct and estimate a simple VAR model. The data for this model is acquired from results of an experimental study (lasted for 70 rounds), the purpose of which is to identify behavioral patterns of participants while meeting demand for credit, specifics of subjectively weighted assessment of credit risk, based on shock approach. The results of the study allow confirming institutional memory hypothesis. After initial shock of bad debts, number of periods to recover willingness to accept risk has increased by 39%, which supports the hypothesis of availability heuristic?s influence. However, with improvement of loan portfolio?s quality, willingness to take risk is restoring. In addition, we managed to confirm existence of risk?s underestimation and overestimation periods in an experimental manner.

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Pickett, Justin T. "Using Behavioral Economics to Advance Deterrence Research and Improve Crime Policy: Some Illustrative Experiments." Crime & Delinquency 64, no. 12 (March 21, 2018): 1636–59. http://dx.doi.org/10.1177/0011128718763136.

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Recent experiments show that offender decision making is characterized by the use of cognitive heuristics. Questions remain about what this means for deterrence research and policy. I argue that the primary task is to identify ways to leverage decision-making biases to reduce crime. I outline three avenues for future research on deterrence, and discuss their relevance for crime policy. To illustrate these lines of inquiry and stimulate additional studies, I provide initial experimental results for each topic. I report evidence that (a) pseudocertainty publicity can increase perceived arrest risk and deterrent fear, (b) the availability heuristic can help explain how target characteristics affect situational perceptions of crime benefits and costs, and (c) individuals experience declining sensitivity to increases in sanction severity.

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Anysiadou, Melpomeni. "Exploring Attitude toward Virtual Bank Cards Using Nudge Theory and Experimental Analysis." Business and Economic Research 13, no. 1 (January 27, 2023): 15. http://dx.doi.org/10.5296/ber.v13i1.20703.

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Purpose: The study aimed to investigate Greek consumers' attitudes and actual behavior toward virtual bank cards and to show whether Experimental Economics can incentivize these banking products.Methodology: For data collection, a specially designed experiment was conducted among Greek consumer samples according to Experimental Economics and Nudging Theory principles. Econometric analysis was conducted through Multi-level Models and Bivariate statistical tests.Results: Results suggest that demographic characteristics such as age combined with personalization and consumer risk perception play an important role in virtual bank card adoption. The youngest consumers are optimistic about their use, while the oldest are negative. Furthermore, Experimental Economics and Nudging Theory could identify behavioral changes.Novelty: The study's novelty and uniqueness are based on investigating Greek consumers' attitudes and behavior towards new and innovative banking products, which still need to be well known. The research methodology is also a groundbreaking feature of the study, as Experimental Economics is the most appropriate method to study human behavior and its unconscious influencing factors that cannot be studied in other ways.

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Klempt, Charlotte, Kerstin Pull, and Manfred Stadler. "Asymmetric Information in Simple Bargaining Games: An Experimental Study." German Economic Review 20, no. 1 (February 1, 2019): 29–51. http://dx.doi.org/10.1111/geer.12138.

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Abstract Bilateral bargaining situations are often characterized by informational asymmetries concerning the size of what is at stake: in some cases, the proposer is better informed, in others, it is the responder. We analyze the effects of both types of asymmetric information on proposer behavior in two different situations which allow for a variation of responder veto power: the ultimatum and the dictator game. We find that the extent to which proposers demand less in the ultimatum as compared to the dictator game is (marginally) smaller when the proposer is in the superior information position. Further we find informed proposers to exploit their informational advantage by offering an amount that does not reveal the true size of the pie, with proposers in the ultimatum game exhibiting this behavioral pattern to a larger extent than those in the dictator game. Uninformed proposers risk imposed rejection when they ask for more than potentially is at stake, and ask for a risk premium in dictator games. We concentrate on proposers, but also explore responder behavior: We find uninformed responders to enable proposers’ hiding behavior, and we find proposer intentionality not to play an important role for informed responders when they decide whether to accept or reject an offer by an (uninformed) proposer.

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Blavatskyy, Pavlo, Andreas Ortmann, and Valentyn Panchenko. "On the Experimental Robustness of the Allais Paradox." American Economic Journal: Microeconomics 14, no. 1 (February 1, 2022): 143–63. http://dx.doi.org/10.1257/mic.20190153.

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The Allais Paradox, or the common consequence effect, is a well-known behavioral regularity in individual decision-making under risk. Data from 81 experiments reported in 29 studies reveal that the Allais Paradox is a fragile empirical finding. The Allais Paradox is likely to be observed in experiments with high hypothetical payoffs, the medium outcome being close to the highest outcome and when lotteries are presented as a probability distribution (not in a compound form). The Allais Paradox is likely to be reversed in experiments when the probability mass is equally split between the lowest and highest outcomes in risky lotteries. (JEL D44, D81)

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White, Mark D. "Nudging Debt: On the Ethics of Behavioral Paternalism in Personal Finance." Journal of Financial Counseling and Planning 28, no. 2 (2017): 225–34. http://dx.doi.org/10.1891/1052-3073.28.2.225.

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In recent years, experimental psychology and behavioral economics have cast doubt on the quality and reliability of individual decision making, especially in complicated choice contexts involving risk and time. These factors imply that financial decision making is particularly subject to such doubts, which has generated calls for increased regulation based on behavioral science to help people avoid imprudent decisions regarding borrowing, such as those implemented by the relatively new Consumer Financial Protection Bureau. This article argues that such interventions are fraught with ethical problems based on the regulators’ inability to appreciate the complex, multifaceted, and subjective interests of borrowers and recommends alternative approaches to helping people make better borrowing decisions while respecting their personal interests.

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Lude, Maximilian, and Reinhard Prügl. "Risky Decisions and the Family Firm Bias: An Experimental Study Based on Prospect Theory." Entrepreneurship Theory and Practice 43, no. 2 (September 6, 2018): 386–408. http://dx.doi.org/10.1177/1042258718796078.

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In this article, we look at how a family firm signal affects decision making of nonprofessional investors. Grounded in prospect theory and supported by empirical evidence from a choice-based experimental study ( N = 418) backed by a qualitative study, we demonstrate a behavioral bias induced by the family firm signal. This family firm bias shifts nonprofessional investors’ preferences toward the high-risk alternative in a choice situation. Accordingly, processing the family firm information seems to moderate risk aversion as risk avoidance is decreased in the gain domain, while risk seeking is reinforced in the loss domain due to trust and longevity associations tied to the family firm signal.

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Wright, James, and Kevin Leyton-Brown. "Beyond Equilibrium: Predicting Human Behavior in Normal-Form Games." Proceedings of the AAAI Conference on Artificial Intelligence 24, no. 1 (July 4, 2010): 901–7. http://dx.doi.org/10.1609/aaai.v24i1.7644.

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It is standard in multiagent settings to assume that agents will adopt Nash equilibrium strategies. However, studies in experimental economics demonstrate that Nash equilibrium is a poor description of human players' initial behavior in normal-form games. In this paper, we consider a wide range of widely-studied models from behavioral game theory. For what we believe is the first time, we evaluate each of these models in a meta-analysis, taking as our data set large-scale and publicly-available experimental data from the literature. We then propose modifications to the best-performing model that we believe make it more suitable for practical prediction of initial play by humans in normal-form games.

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Halevy, Yoram. "Strotz Meets Allais: Diminishing Impatience and the Certainty Effect." American Economic Review 98, no. 3 (May 1, 2008): 1145–62. http://dx.doi.org/10.1257/aer.98.3.1145.

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Decision makers tend to exhibit a higher degree of impatience when considering a delay to an immediate reward than when contemplating an identical delay to an equal future reward. This work argues that diminishing impatience originates from the distinction between the certain present and the risky future. A simple functional representation of preferences, exhibiting time inconsistency when the future is uncertain, is derived. Experimental evidence, which is inconsistent with other formulations that account for diminishing impatience, supports the proposed approach. The new theory uncovers a tight relation between diminishing impatience and well-known behavioral regularities in choice under risk and uncertainty. (JEL D12, D81)

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González-Roz, Alba, Itziar Suárez-Martínez, Gema Alonso-Diego Alonso-Diego, Víctor Martínez-Loredo, and Roberto Secades-Villa. "Insights from behavioral economics to characterize substance use involvement in adolescents: a cluster analysis." Revista de Psicología Clínica con Niños y Adolescentes 8, no. 2 (May 2021): 37–43. http://dx.doi.org/10.21134/rpcna.2021.08.2.5.

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Reinforcement pathology (RP), a framework rooted in behavioral economics, has contributed to advances in the etiology and treatment of substance use. Drug demand and delay discounting (DD) have gained considerable interest, as they inform on the risk for escalation to substance use as well as treatment-specific targets. No prior study conducted in Spain has explored the interplay of demand and DD in adolescents. This study was aimed to: 1) identify whether DD and alcohol demand can yield empirically driven subgroups, and 2) examine differences in substance use involvement. The sample comprised 107 (% females = 54.2) adolescents (M=15.46, SD=1.25) from a high school in Asturias (Spain). Participants filled out an ad-hoc survey on substance use over the prior 30 days and one year. A 20-item alcohol purchase task (APT) was used to assess the reinforcing value of alcohol. The 21-item Monetary Choice Questionnaire evaluated impulsive choice. Two subgroups emerged: Cluster 1 (n = 72) and Cluster 2 (n = 35). Participants in C2 consistently showed higher impulsivity and demand for alcohol, signifying lower responsiveness to alcohol pricing. As compared to C1, those in C2 had a higher prevalence of past-month substance use [C1: 26/72 (36.1%) vs. C2: 33/35 (94.3%), p <.001], and a greater frequency of drunkenness [p <.001] and binge drinking episodes [p <.001]. RP differentiate between subgroups of adolescent substance users with patterns of more versus less substance use involvement. The existence of specific drug use subpopulations should be considered when designing environmental preventive policies

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Zumaeta, Jorge N. "Meta-Analysis of Seven Standard Experimental Paradigms Comparing Student to Non-student." Journal of Economics and Behavioral Studies 13, no. 2(J) (May 25, 2021): 22–33. http://dx.doi.org/10.22610/jebs.v13i2(j).3179.

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This study embarked on the very challenging proposition of systematically organizing and classifying an assortment of experimental economics essays pertinent to seven experiments performed with both non-student and student populations. The experiments were the Dictator game, Stag Hunt – Coordination game, Risk Aversion Measurement (as measured by the players type of lottery choice), Trust game, Guessing game, Prudence Measurement, and the Guessing game. This meta-analysis reviewed 126 published and unpublished papers collected from several journals and papers provided by several authors via the Google Groups "Economic Science Association - Experimental Methods Discussion" group. Ultimately, only 39 studies were utilized due to methodological alignment. While some studies showed statistically significant differences between non-students and students as indicated by their respective 95% confidence intervals, the overall random-effects model of each of the seven games showed not to be statistically significant. This study contributes to the literature in three important ways. First, the study generates a comprehensive inventory and review of experiments comparing student to non-student populations for the last four decades; second, the study points out a possible limitation when combining several studies of the same game, despite following similar protocols, suggesting that compounded contextual complexities might diminish aggregate effects of the individuals’ behavioral responses to the financial incentives, and third, the study indicates that generalizations from one experimental economic study, may not render a solid base for extending statistical extrapolations applicable to the total population since the aggregate effects do not indicate substantial differences.

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Seiler, Michael J. "International Real Estate Review." International Real Estate Review 17, no. 2 (August 31, 2014): 137–56. http://dx.doi.org/10.53383/100182.

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This study uses a behavioral approach to measure the impact of a partial eminent domain land taking (which affects easement rights and causes proximity damage) on residential property values. Existing appraisal methods are not suited to handle this type of unique valuation impact determination, yet diminution must be determined by the courts to establish proper "just compensation". To accomplish the quantification of damages, an experimental design is implemented that allows the market to voice its opinion of valuation impact through a mechanism other than direct comparable sales. Moreover, this behavioral methodology can and should be used in a number of additional real estate valuation applications.

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Balkenborg, Dieter, and Rosemarie Nagel. "An Experiment on Forward vs. Backward Induction: How Fairness and Level k Reasoning Matter." German Economic Review 17, no. 3 (August 1, 2016): 378–408. http://dx.doi.org/10.1111/geer.12099.

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AbstractWe report the experimental results on a game with an outside option where forward induction contradicts with backward induction based on a focal, risk dominant equilibrium. The latter procedure yields the equilibrium selected by Harsanyi and Selten’s (1988) theory, which is hence here in contradiction with strategic stability (Kohlberg and Mertens, 1986). We find the Harsanyi-Selten solution to be in much better agreement with our data. Since fairness and bounded rationality seem to matter we discuss whether recent behavioral theories, in particular fairness theories and learning, might explain our findings. The fairness theories by Bolton and Ockenfels (2000), Charness and Rabin (2002), or Fehr and Schmidt (1999), when calibrated using experimental data on dictator- and ultimatum games, indeed predict that forward induction should play no role for our experiment and that the outside option should be chosen by all sufficiently selfish players. However, there is a multiplicity of ‘fairness equilibria’, some of which seem to be rejected because they require too many levels of reasoning. We show that learning theories based on naive priors could alternatively explain our results, but not that of closely related experiments.

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Payne, Collin R., Kent D. Messer, and Harry M. Kaiser. "Which Consumers Are Most Responsive to Media-Induced Food Scares?" Agricultural and Resource Economics Review 38, no. 3 (December 2009): 295–310. http://dx.doi.org/10.1017/s1068280500009552.

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In understanding decreases in demand after exposure to media-induced food scares, aggregate data are almost exclusively presented without taking into consideration potential confounding variables. However, a better approach may be to use an experimental design coupled with targeting homogeneous willingness-to-pay (WTP) subgroups based on similarities in behavioral, psychological, and demographic characteristics of those who are most vulnerable to food scare information. This is accomplished through experimental economics and an analysis strategy called a classification and regression tree (CART). A stigma framework—which guides conceptual understanding of effects of media-induced food scares—suggests controlling contextual variables to better approximate ceteris paribus. To this end, we conducted an experiment that exposed people to information about mad cow disease and then asked them to bid their willingness-to-pay for an actual hamburger. The CART found distinct homogeneous WTP subgroups of individuals that could be used by government and industry professionals to create interventions to reduce potential consumer concern and producer losses.

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Bjorvatn, Kjetil, Alexander W. Cappelen, Linda Helgesson Sekei, Erik Ø. Sørensen, and Bertil Tungodden. "Teaching Through Television: Experimental Evidence on Entrepreneurship Education in Tanzania." Management Science 66, no. 6 (June 2020): 2308–25. http://dx.doi.org/10.1287/mnsc.2019.3321.

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Can television be used to teach and foster entrepreneurship among youth in developing countries? We report from a randomized control field experiment of an edutainment show on entrepreneurship broadcasted over almost three months on national television in Tanzania. The field experiment involved more than 2,000 secondary school students, where the treatment group was incentivized to watch the edutainment show. We find some suggestive evidence of the edutainment show making the viewers more interested in entrepreneurship and business, particularly among females. However, our main finding is a negative effect: the edutainment show discouraged investment in schooling without convincingly replacing it with some other valuable activity. Administrative data show a strong negative treatment effect on school performance, and long-term survey data show that fewer treated students continue schooling, but we do not find much evidence of the edutainment show causing an increase in business ownership. The fact that an edutainment show for entrepreneurship caused the students to invest less in education carries a general lesson to the field experimental literature by showing the importance of taking a broad view of possible implications of a field intervention. This paper was accepted by David Simchi-Levi, behavioral economics.

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Čop, Tajana, and Mario Njavro. "Application of Discrete Choice Experiment in Agricultural Risk Management: A Review." Sustainability 14, no. 17 (August 25, 2022): 10609. http://dx.doi.org/10.3390/su141710609.

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The study of human behaviour has been cementing its place within economics for decades. The complexity of decisions in family farming, challenging agricultural markets, and climate change have drawn attention to human behaviour, namely risk perceptions and the decision-making process, with a focus on agricultural economics. This paper reviews current knowledge on risk management in agriculture from the behavioral perspective, and from the perspective experimental economics in particular, emphasizing a discrete choice experiment approach. A discrete choice experiment (DCE) elicits stated preferences through hypothetical choices and have been extensively applied in research on risk preferences and farmers’ willingness to apply different risk management strategies. The objective of this paper was to determine the frequency at which papers are published and their use in discrete choice experiments in general and in agriculture and emphasizes risk management in agriculture using bibliometric analysis. The PRISMA framework was used for a systematic literature review of the agricultural risk management publications that apply a DCE. The main steps to achieve the aforementioned goals are to define how many publications are primary research versus theoretical publications in the research area of agricultural risk management, which part of risk management in agriculture it covers, and how many attributes were used in each study. The authors reviewed 20 papers based on the following keyword criteria: discrete choice experiment, agriculture, risk management, and the period 2001–2021, using the Web of Science database. The results show an increase in DCE publications over the past 20 years. A comprehensive literature review of risk management in agriculture concluded that publications are primarily research focused, mainly consider on-farm strategies and smaller-scale risk-transfer strategies, and are predominantly conducted among farmers. The average number of attributes per publication is four to five. Limitations and directions for future research are discussed in the paper.

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Tymula, Agnieszka. "An experimental study of adolescent behavior under peer observation: Adolescents are more impatient and inconsistent, not more risk-taking, when observed by peers." Journal of Economic Behavior & Organization 166 (October 2019): 735–50. http://dx.doi.org/10.1016/j.jebo.2019.08.014.

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Hafner-Burton, Emilie M., D. Alex Hughes, and David G. Victor. "The Cognitive Revolution and the Political Psychology of Elite Decision Making." Perspectives on Politics 11, no. 2 (May 21, 2013): 368–86. http://dx.doi.org/10.1017/s1537592713001084.

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Experimental evidence in cognitive psychology and behavioral economics is transforming the way political science scholars think about how humans make decisions in areas of high complexity, uncertainty, and risk. Nearly all those studies utilize convenience samples of university students, but in the real world political elites actually make most pivotal political decisions such as threatening war or changing the course of economic policy. Highly experienced elites are more likely to exhibit the attributes of rational decision-making; and over the last fifteen years a wealth of studies suggest that such elites are likely to be more skilled in strategic bargaining than samples with less germane experience. However, elites are also more likely to suffer overconfidence, which degrades decision-making skills. We illustrate implications for political science with a case study of crisis bargaining between the US and North Korea. Variations in the experience of US elite decision-makers between 2002 and 2006 plausibly explain the large shift in US crisis signaling better than other rival hypotheses such as “Iraq fatigue.” Beyond crisis bargaining other major political science theories might benefit from attention to the attributes of individual decision-makers.

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Niv, Yael, Daphna Joel, Isaac Meilijson, and Eytan Ruppin. "Evolution of Reinforcement Learning in Uncertain Environments: A Simple Explanation for Complex Foraging Behaviors." Adaptive Behavior 10, no. 1 (January 1, 2002): 5–24. http://dx.doi.org/10.1177/1059-712302-010001-01.

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Reinforcement learning is a fundamental process by which organisms learn to achieve goals from their interactions with the environment. Using evolutionary computation techniques we evolve (near-)optimal neuronal learning rules in a simple neural network model of reinforcement learning in bumblebees foraging for nectar. The resulting neural networks exhibit efficient reinforcement learning, allowing the bees to respond rapidly to changes in reward contingencies. The evolved synaptic plasticity dynamics give rise to varying exploration/exploitation levels and to the well-documented choice strategies of risk aversion and probability matching. Additionally, risk aversion is shown to emerge even when bees are evolved in a completely risk-less environment. In contrast to existing theories in economics and game theory, risk-averse behavior is shown to be a direct consequence of (near-)optimal reinforcement learning, without requiring additional assumptions such as the existence of a nonlinear subjective utility function for rewards. Our results are corroborated by a rigorous mathematical analysis, and their robustness in real-world situations is supported by experiments in a mobile robot. Thus we provide a biologically founded, parsimonious, and novel explanation for risk aversion and probability matching.

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Ullberg, Eskil. "Economic efficiency and field-of-use pricing of SEP licences under FRAND terms." Queen Mary Journal of Intellectual Property 9, no. 4 (December 2019): 392–413. http://dx.doi.org/10.4337/qmjip.2019.04.02.

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This article is concerned with the producer market in patented technology, and whether price differentiation based on field-of-use – a common strategy adopted by businesses with high fixed costs – is economically efficient. The focus is on the licensing of Standard Essential Patents (SEPs) on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions, including also the Internet of Things (IoT) applications, and the economic growth in the digital economy, especially for small and medium sized enterprises (SMEs). The central argument proposed is that the absolute difference in the value between usages of essential standardized technologies determines whether a single price for all usages or specific field-of-use prices are economically efficient. A small difference in value should result in a single price and a large difference in different prices. Pricing policy is critical to create a world-wide sustained technology development including contributions from, and applications for, emerging markets and developed markets, thereby growing the digital economy. In this literature review, three evaluation angles of the literature are used: a market analysis under neo-classical assumptions of price-taking agents and marginal (incremental) value; an expanded market analysis where the willingness to pay (WTP) replaces marginal cost as criteria for what price should be paid for licences; and an analysis of market designs with similar characteristics as the SEP market in terms of risk, using experimental economics (behavioural) and auction theory. All analyses angles investigate the principle of field-of-use licensing, established already in the first known patent law in 1474.

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Thomas, Catherine Cole, and Hazel Rose Markus. "Enculturating the Science of International Development: Beyond the WEIRD Independent Paradigm." Journal of Cross-Cultural Psychology 54, no. 2 (January 28, 2023): 195–214. http://dx.doi.org/10.1177/00220221221128211.

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Initiatives in international development and behavioral science rely predominantly on the independent models of the self and agency that are prevalent in individualist Western, Educated, Industrialized, Rich, and Democratic (WEIRD) cultural contexts. Programs that are guided by these independent models, explicitly or implicitly, as the default way of being and that neglect interdependent models can reduce the potential of development initiatives to advance poverty reduction and well-being in two ways. First, programs based solely on independent models of agency—centered on personal goals and values; self-advancement and self-expression; and autonomy—can limit the scope and effectiveness of the development science toolkit. Second, programs that are not responsive to interdependent ways of being—centered on relational goals and values; responsiveness to social norms, roles, and obligations; and social coordination—that are common in many Global South sociocultural contexts can be met with resistance or backlash. We propose that taking account of interdependent psychosocial tendencies is a promising way to diversify the behavioral science toolkit and to build a more comprehensive science of human behavior. Furthermore, culturally responsive program designs have the potential both to promote decolonized, inclusive approaches that preserve rather than override local ways of being and to enable diverse trajectories of societal development to flourish. We integrate experimental and descriptive research from psychology, economics, education, and global health to suggest how models of interdependent agency can be productively integrated into development program designs to advance quality of life in locally resonant ways.

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Lippi, Andrea, Edoardo Lozza, Federica Poli, and Cinzia Castiglioni. "How does the emotional meaning associated with money and financial advisor’s characteristics impact investors’ risk-taking?" Journal of Neuroscience, Psychology, and Economics 14, no. 4 (December 2021): 207–21. http://dx.doi.org/10.1037/npe0000150.

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Proestakis, Antonios, Antonio M. Espín, Filippos Exadaktylos, Alexandra Cortés Aguilar, Olusegun A. Oyediran, and Luis A. Palacio. "The separate effects of self-estimated and actual alcohol intoxication on risk taking: A field experiment." Journal of Neuroscience, Psychology, and Economics 6, no. 2 (2013): 115–35. http://dx.doi.org/10.1037/npe0000004.

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Mußhoff, Oliver, Norbert Hirschauer, Sven Grüner, and Stefan Pielsticker. "Bounded rationality and the adoption of weather index insurance." Agricultural Finance Review 78, no. 1 (February 5, 2018): 116–34. http://dx.doi.org/10.1108/afr-02-2017-0008.

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Purpose The purpose of this paper is to check which role-bounded rationality might play as an explanation for farmers’ missing willingness to adopt weather index insurance (WII). WII is an innovative risk management instrument that causes low administration and regulation costs. Moreover, index insurance is plagued neither by moral hazard nor by adverse selection. Nonetheless, WII has been little used to date in agriculture. Design/methodology/approach An extra-laboratory experiment in the form of a multi-period, single-person business simulation game is conducted with farmers as experimental subjects to investigate the reasons for the low willingness to adopt WII. Findings First, the demand for WII decreases as the premium loading increases. Second, a transparent communication of the loading reduces demand, indicating that farmers refrain from transactions if they feel that the other party earns (too) much money. Third, communicating to farmers that the index insurance has been subsidized raises demand even though insurance costs in terms of loading are kept constant. This can be taken as an indication that farmers interpret subsidies as a signal for profitable action. Originality/value Using an experimental approach and going beyond observational research, this study investigates the prominent question of farmers’ risk management and innovation adoption behavior, and, in particular, the behavioral effect of subsidies. Using a randomized controlled trial, the real behavior of real subjects with real incentives is studied under controlled experimental conditions. Compared to prior studies, the external validity of the experiment is improved by recruiting farmers instead of a convenience group of students.

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Asgarnezhad Nouri, Bagher, Samira Motamedi, and Milad Soltani. "Empirical Analysis of the Financial Behavior of Investors with Brand Approach (Case Study: Tehran Stock Exchange)." Scientific Annals of Economics and Business 64, no. 1 (March 1, 2017): 97–121. http://dx.doi.org/10.1515/saeb-2017-0007.

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Abstract Behavioral science in the field of finance and investment is among new topics raised in recent years. The relationship between financial sciences and other fields of social sciences such as financial psychology has caused researchers to do many researches regarding the behavior of investors in the financial markets and their reactions to different situations. Based on the theories of financial behavior, shareholders' decision to buy and sell stocks is under the influence of internal and external psychological factors. Through designing and experimental testing of the model of investors' financial behavior in the Tehran Stock Exchange with an emphasis on brand, this study was an attempt to investigate the influence of these factors. To this end, financial, psychological and social factors were considered as the most important external factors influencing the behavior of investors and, considering the mediating role of brand awareness, their impact on perceived risk and perceived return as well as investment intention was tested. The research population consisted of all individual investors in the Tehran Stock Exchange. In order to determine the sample size, considering unlimited population, Cochran formula was used and hence the sample size was determined to be 145. For data collection, standard questionnaire was used. Confirmatory factor analysis was used to test the reliability of the questionnaire and the research hypotheses were tested using path analysis. The results showed that psychological factors have a positive impact on perceived risk and returns. Financial factors had a positive impact on perceived risk but no impact on perceived return. The impact of social factors on perceived risk and perceived return was not confirmed. Moreover, the results showed that brand awareness has a moderating role in the relationship between social factors and perceived risk and return. However, its moderating role was not confirmed in the relationship between the psychological and financial factors and perceived risk and return. Perceived risk had a positive effect on attitude toward the brand. However, the impact of perceived return on attitude toward the brand was not significant. Finally, the attitude toward the brand had a positive effect on shareholders' investment intention.

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Cao, Ying (Jessica), Calum Turvey, Jiujie Ma, Rong Kong, Guangwen He, and Jubo Yan. "Incentive mechanisms, loan decisions and policy rationing." Agricultural Finance Review 76, no. 3 (September 5, 2016): 326–47. http://dx.doi.org/10.1108/afr-08-2015-0032.

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Purpose The purpose of this paper is to investigate whether negative incentives in the pay-for-performance mechanism would trigger loan officers to strategically reject potentially good loans. If so, what is the feasible solution to alleviate the problem. Design/methodology/approach A framed field experiment was conducted to test loan decision behaviors using loan officers from Rural Credit Cooperatives in Shandong, China. A 2 by 2 between-subject design was adopted to generate variation in incentives and prior information about credit risks. Findings Results showed that loan officers did ration credit by rejecting more loans when facing risks of personal income loss. However, providing risk information about the application pool boosted the approval rate and offset the behavioral responses by a roughly same magnitude. Research limitations/implications Findings in this study suggest that certain institutional settings can result in credit rationing via strategic loan misclassification. Further, information sometimes generates similar effects as those costly incentives or mechanisms that are not implementable in practice. Originality/value This study adopted an innovative monetized experimental design that allows researchers to examine the (otherwise unobservable) trade-offs between Type I and Type II error in loan misclassification as incentives change. In addition, an anchoring prior information treatment is used to solicit the relative power of almost costless information and costly monetary incentives, and to point out a potentially feasible solution.

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Wójcicki, Włodzimierz. "Review of the Monograph “Unconditional Basic Income. A Revolutionary Reform of the 21st Century Society” By Maciej Szlinder, Pwn, Warsaw, 2018, P. 310." Economic and Regional Studies / Studia Ekonomiczne i Regionalne 13, no. 3 (September 1, 2020): 363–74. http://dx.doi.org/10.2478/ers-2020-0027.

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SummaryThe economic forum currently sees the postulate of a multi-dimensional analysis of economic issues, as exemplified by behavioural and institutional economics, cliometrics, wikinomics and others – taking into consideration of the achievements of cultural anthropology, sociology, ethics, philosophy, the history of economics, as well as selected exact sciences, such as mathematics and physics. The redistribution economics, the relationship between capital and labour, the issues of the precariat, guaranteed minimum income for each citizen – both conditional and unconditional, which is a new idea for economy and the society – become more and more apparent in the aforementioned areas. The idea stems from the criticism of neoliberalism, and it interferes with the system of values shaped under capitalism, the role of the welfare state, the welfare system from the perspective of institutions and beneficiaries, who would replace their current privileges with inalienable rights. The author recommends unconditional minimum income upon providing a characteristic of a wide scope of postulated solutions, implemented on an experimental scale and applied in the practice of social policy. The monograph, while constituting the author’s moderate manifesto, provides a wide – in terms of time, authors and trends in economy – review of the standpoints on the participation in the national income.

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Schoemaker, Paul J. H. "Determinants of risk-taking: Behavioral and economic views." Journal of Risk and Uncertainty 6, no. 1 (January 1993): 49–73. http://dx.doi.org/10.1007/bf01065350.

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Li, Zheng. "Experimental Evidence on Socioeconomic Differences in Risk‐Taking and Risk Premiums." Economic Record 96, no. 313 (May 28, 2020): 140–52. http://dx.doi.org/10.1111/1475-4932.12544.

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Cappelen, Alexander W., James Konow, Erik Ø. Sørensen, and Bertil Tungodden. "Just Luck: An Experimental Study of Risk-Taking and Fairness." American Economic Review 103, no. 4 (June 1, 2013): 1398–413. http://dx.doi.org/10.1257/aer.103.4.1398.

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Choices involving risk significantly affect the distribution of income and wealth in society. This paper reports the results of the first experiment, to our knowledge, to study fairness views about risk-taking, specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes. We find that, even though many participants focus exclusively on ex ante opportunities, most favor some redistribution ex post. Many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices. These findings apply to both stakeholders and impartial spectators. (JEL D63, D81, H23)

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Oehler, Andreas, and Florian Wedlich. "The relationship of extraversion and neuroticism with risk attitude, risk perception, and return expectations." Journal of Neuroscience, Psychology, and Economics 11, no. 2 (June 2018): 63–92. http://dx.doi.org/10.1037/npe0000088.

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Cappelen, Alexander W., James Konow, Erik Ø. Sørensen, and Bertil Tungodden. "Just Luck: An Experimental Study of Risk-Taking and Fairness: Erratum." American Economic Review 106, no. 2 (February 1, 2016): 476–77. http://dx.doi.org/10.1257/aer.20100273.

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Nieken, Petra, and Dirk Sliwka. "Risk-taking tournaments – Theory and experimental evidence." Journal of Economic Psychology 31, no. 3 (June 2010): 254–68. http://dx.doi.org/10.1016/j.joep.2009.03.009.

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Callen, Michael, Mohammad Isaqzadeh, James D. Long, and Charles Sprenger. "Violence and Risk Preference: Experimental Evidence from Afghanistan." American Economic Review 104, no. 1 (January 1, 2014): 123–48. http://dx.doi.org/10.1257/aer.104.1.123.

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We investigate the relationship between violence and economic risk preferences in Afghanistan combining: (i) a two-part experimental procedure identifying risk preferences, violations of Expected Utility, and specific preferences for certainty; (ii) controlled recollection of fear based on established methods from psychology; and (iii) administrative violence data from precisely geocoded military records. We document a specific preference for certainty in violation of Expected Utility. The preference for certainty, which we term a Certainty Premium, is exacerbated by the combination of violent exposure and controlled fearful recollections. The results have implications for risk taking and are potentially actionable for policymakers and marketers. (JEL A12, C91, D12, D74, D81, O12, O17)

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BISSIRI, MATTEO, and RICCARDO COGO. "BEHAVIORAL VALUE ADJUSTMENTS." International Journal of Theoretical and Applied Finance 20, no. 08 (December 2017): 1750050. http://dx.doi.org/10.1142/s0219024917500509.

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Assets or liabilities with embedded prepayment/extension options can be subject to behavioral risk, due to the unpredictable exercise strategy followed by the option holder who does not act purely on the strength of financial convenience. When seen from the viewpoint of the option seller, such behavior results in a lower option value and an additional source of uncertainty in future cash flows. In this paper, we propose a general framework to model behavioral risk by taking advantage of a full parallel with credit portfolio modeling and by combining the features of option-based and intensity models. Our approach is micro-structural, meaning that the aggregate prepayment rate derives from the sum of individual decisions. In principle, a detailed characterization of the behavior of a pool of investors can be performed depending on available data. A particular emphasis is placed on the precise definition of behavioral risk and on the modeling of nonmarket factors, which may contribute significantly to the variance of future cash flows. Finally, we discuss the calibration of a behavioral risk premium and the pricing of contracts with embedded options by introducing the concept of behavioral risk adjustment ([Formula: see text]VA), in line with the recent development of XVA methodology.

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Voznyak, H., Kh Patytska, and Т. Kloba. "BEHAVIORAL ECONOMICS IN MODERN RESEARCH OF REGIONAL AND LOCAL DEVELOPMENT: THEORETICAL ASPECTS." Financial and credit activity: problems of theory and practice 1, no. 36 (February 17, 2021): 293–301. http://dx.doi.org/10.18371/fcaptp.v1i36.227893.

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In terms (conditions) of socio-economic crisis, there are changes in the algorithms of acceptance of the investment, financial, management, and other decisions at various levels, which requires the emphasis on the patterns of behavior of participants in financial and economic processes in conditions of risk and uncertainty. The article aims to review the key postulates of behavioral economics, substantiate the possibility and feasibility of applying the theoretical foundations of behavioral economics as the latest model of the irrational behavior of financial and economic relations in practice management at regional and local levels. The theoretical foundations of behavioral economics are revealed, the preconditions of origin (scientific bases, technological level, socio-economic bases) and stages of formation are determined. The interdisciplinary nature of behavioral economics as a science-based on the provisions of economics, psychology, sociology, neurobiology, and studies of socio-economic problems using non-traditional methods and approaches is proved. The study found that the growing trend of the practical application of behavioral economics at the regional and local levels is associated with the possibility of taking into account, except objective factors, irrational behavior of participants in financial and economic processes in conditions of risk and uncertainty. Behavioral differences between «economic man» and Humans are substantiated. It is established that people have such behavioral features as presumed irrationality; limited cognitive skills, emotions, morals, and social norms; limited selfishness; inconsistency (variability) of preferences. The expediency of studying economic relations at the regional and local levels on the basis of behavioral economics is justified by the possibility of explaining the abnormal behavior of economic agents in conditions of uncertainty and risk, which encourages the search for new behavioral strategies of financial and economic relations.

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Mayer, Bernadette, Florian Fuchs, and Volker Lingnau. "Decision-making in the era of AI support—How decision environment and individual decision preferences affect advice-taking in forecasts." Journal of Neuroscience, Psychology, and Economics 16, no. 1 (March 2023): 1–11. http://dx.doi.org/10.1037/npe0000170.

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Savadori, Lucia, and Elena Speranza. "Self-other decision making and protective behavior under risk." Journal of Neuroscience, Psychology, and Economics 14, no. 2 (June 2021): 115–30. http://dx.doi.org/10.1037/npe0000139.

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Haider, Junaid, and Hong-Xing Fang. "CEO power, corporate risk taking and role of large shareholders." Journal of Financial Economic Policy 10, no. 1 (April 3, 2018): 55–72. http://dx.doi.org/10.1108/jfep-04-2017-0033.

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Purpose This paper aims to investigate whether a powerful chief executive officer (CEO) impacts corporate risk taking in the distinctive institutional and market setting of China? Second, in case such relationship exists, the paper further aims to investigate whether the presence of large shareholders affects it, and finally, whether this effect of large shareholders varies in state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs). Design/methodology/approach The authors have used a sample of 1,502 Chinese firms listed on Shanghai and Shenzhen stock exchanges. Sample period is 2008-2013. Besides conventional fixed-effect regression, dynamic panel data estimation (generalized method of moments) is applied to address the potential endogeneity. Findings The results show that CEO power is negatively related with corporate risk taking in two risk proxies, i.e. total risk and idiosyncratic risk. Second, the presence of large shareholders significantly affects this relationship, but does not change the primary negative relationship between CEO power and corporate risk taking. Finally, the results show that the relationship between CEO power and corporate risk taking is different in SOEs and NSOEs. The findings of this paper contend the organizational and behavioral theory viewpoint that individual decisions are more extreme. Practical implications This study provides useful implication for policymakers and suggests that while evaluating CEO’s performance, institutional and market settings should be considered. Originality/value This study provides new insights on the impact of CEO power on corporate risk taking under the two distinctive features in a developing country, i.e. presence of large shareholders and state-owned enterprises.

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Dahlbäck, Olof. "An experimental analysis of risk taking." Theory and Decision 29, no. 3 (November 1990): 183–202. http://dx.doi.org/10.1007/bf00126801.

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Giné, Xavier, Pamela Jakiela, Dean Karlan, and Jonathan Morduch. "Microfinance Games." American Economic Journal: Applied Economics 2, no. 3 (July 1, 2010): 60–95. http://dx.doi.org/10.1257/app.2.3.60.

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Microfinance banks use group-based lending contracts to strengthen borrowers' incentives for diligence, but the contracts are vulnerable to free-riding and collusion. We systematically unpack microfinance mechanisms through ten experimental games played in an experimental economics laboratory in urban Peru. Risk-taking broadly conforms to theoretical predictions, with dynamic incentives strongly reducing risk-taking even without group-based mechanisms. Group lending increases risk-taking, especially for risk-averse borrowers, but this is moderated when borrowers form their own groups. Group contracts benefit borrowers by creating implicit insurance against investment losses, but the costs are borne by other borrowers, especially the most risk averse. (JEL D82, G21, G31, O16)

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Journal articles on the topic 'Behavioral economics, experimental economics, risk-taking'

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