Дисертації з теми "Behavioral economics, experimental economics, risk-taking"

The effect of competition on risk-taking in contests (with Jan Potters) We investigate, theoretically and experimentally, the effect of competition on risktaking in a contest in which players only decide on the level of risk they wish to take. Taking more risk implies a chance of a higher performance, but also implies a higher chance of failure. We vary the level of competition in two ways: by varying the number of players (2 players versus 8 players), and by varying the sensitivity of the contest to differences in performance (lottery contest versus all-pay auction). Our results show that there is a significant interaction effect between the two treatments, suggesting that players are particularly prone to take more risks if both the number of players and the sensitivity to performance are higher. *************************************************************************************************** Dual-process cognition of risk-taking decisions: an online experiment In this study, we experimentally investigate the role of the mode of cognition on risk taking. In an online experiment, we exogenously manipulate the mode of cognition by means of a motivation treatment, where subjects are required to motivate their choice and, hence, are more likely to make a choice under deliberation. Our results show a significant effect of the motivation treatment on risk-taking, suggesting that subjects are more prone to take risk when deliberation is active. This effect is stronger and more significant if we consider only subjects who have no probabilistic understanding of the decision problem. Based on our experimental findings, we argue that deliberation and comprehension are substitutes when individuals make decisions involving risk. ****************************************************************************************************** The mode of cognition mediates the relationship between personality traits and risk-taking: an online experiment In this study, we experimentally investigate how the mode of cognition mediates the relation between personality traits and risk taking. In an online experiment, the mode of cognition is exogenously manipulated by asking subjects to motivate their choice in order to invoke more deliberative decisions. Although the evidence is not particularly strong, it appears to be suggestive for a role of the mode of cognition in the relation between personality traits and risk-taking behaviors. We find that higher levels of Conscientiousness, Neuroticism and Openness to Experience are associated with a lower degree of risk-taking in the control treatment, and that, in the treatment with motivation, Agreeableness has a qualitatively similar association. Moreover, our experimental results show that risk taking behaviors are more affected by traits of personality when decisions are taken under a more intuitive mode of cognition.

In previous research, aggregation of returns has been found as a way to counteract the risk averse behavior that is the result of investors' myopia. This paper expands the study of aggregation by analyzing its effect on forward looking probabilities. Namely, through the disaggregation of future information, subjects become myopic and trade with varying risk preferences. In an experimental market, subjects trading securities with disaggregated forward looking information are found to 'buy high and sell low', while subjects trading the same securities, but with aggregated information, trade with more consistent risk preferences.

1. Introduction This dissertation consists of six chapters that span a very diverse set of topics. Yet, it has two unifying themes, economics and biology, that tie it together. The first four chapters present the principal findings from a project that was initiated jointly with David Cesarini and Magnus Johannesson, and that applies the twin method from behavioral genetics to economics. The last two chapters instead use a simple regression framework and evidence from biological anthropology to investigate recent claims regarding the effects of child bearing and past slave trades. 2. Genes and economics There is a small, but rapidly growing, literature studying the genetic and environmental origins of economic behavior and outcomes (Bowles et al., 2005; Beauchamp et al., 2011). Until recently, this literature focused exclusively on outcomes, and in particular income. In chapters 1-4 we instead focus on economic behavior and decision-making. Previous behavioral genetic work outside the domains of economics has changed the way that we think about a number of behavioral traits. In this literature it is typically found that i) variation is heritable ii) genetic factors are more important than family environment iii) a large fraction of variation cannot be explained by neither genes nor family environment (Turkheimer, 2000; Plomin et al., 2009). However, compared to many other disciplines, and psychology in particular, economics is lagging behind. In fact, as recently as 2009 the leading text book in behavioral genetics described economics as "still essentially untouched by genetic research" (Plomin et al., 2009, p. 353). Hopefully, the chapters in this dissertation can help to improve on this somewhat unsatisfactory state of the art. Chapters 1 and 2 study economic decision-making in the laboratory using the twin method. More specifically, we study the ultimatum and dictator games alongside risky gambles, using same-sex twin pairs as our subject pool. Given a few additional assumptions, the fact that identical twins have, in expectation, a twice as high coefficient of genetic relatedness as fraternal twins implies that we can study the genetic and environmental contributions to variation in behavior by studying twin correlations in observed choices. Chapters 3 and 4 apply the same method to actual portfolio choices associated with a far-reaching pension reform, as well as to a set of standard behavioral anomalies. Taken together, these four chapters provide strong evidence in favor of the hypothesis that genes influence economic decision-making. Thus, economic behavior does not appear to be much different from other types of behavior. 3. Economics and history The last two chapters of the dissertation turn to the past, rather than genes, in an effort to evaluate recent findings regarding two important welfare outcomes. In chapter 5 we investigate Nunn’s (2008) claim that past slave trades had a negative impact on current economic performance in Africa. By extending the sample period back in time we demonstrate that this relationship was not significant in 1960. In addition, by applying Nunn’s method to an episode of large scale slave raiding in Italy, we demonstrate that there exists a similar negative relationship across Italian regions, although it becomes insignificant when geographical controls are included. Intriguingly, going back to 1960, the coefficient on slave raids for Italy also has a similar time trend to that for Africa. Taking these facts, and our reading of the historical and anthropological literature, which is much different from that of Nunn, into account we do not find much support for the hypothesis that the African slave trades had a negative impact on current economic performance. Finally, chapter 6 investigates the large and negative relationship between giving birth to a son, rather than a daughter, and maternal longevity that was documented in a Sami hunter-gatherer population from Finland (Helle et al., 2002). Using a substantially larger sample of pre-industrial Swedish Sami we find no evidence in favor of such a relationship. 4. Brasklapp Five of the chapters in this dissertation (Ch. 1-4 & 6) are slightly altered versions of previously published papers (Wallace et al., 2007; Cesarini et al., 2009 a, b; 2010; 2011). Unfortunately, the fact that earlier versions of the chapters were prepared as separate articles for five different journals means that they can at times appear both repetitive, and in terms of notation and formatting, somewhat inconsistent. I apologize to the reader for these inconveniences.

Diss. Stockholm :  Stockholm School of Economics, 2011. Introduction together with 6 papers

I combine theory, experiments and econometrics to undertake the task of disentangling the subtleties and implications of the distinction between risk, uncertainty and ambiguity. One general conclusion is that the elements of this methodological trilogy are not equally advanced. For example, new experimental tools must be developed to adequately test the predictions of theory. My dissertation is an example of this dynamic between theoretical and applied economics.

This dissertation is a collection of essays (chapters) on behavioral economics. Behavioral economics—arguably one of the most influential innovations in economics over the last 20 years—is a research paradigm introducing psychologically more realistic assumptions into economics. A common theme throughout the dissertation is the focus on either biased beliefs, or heterogeneous preferences, or both. The first chapter serves as an introduction to some themes in behavioral economics and its implications for market outcomes in industrial organization settings. The next two chapters are theoretical papers on entrepreneurial and managerial overconfidence that can also be thought of as contributions to this newly emerging field of behavioral industrial organization. The last chapter is an empirical contribution on gender differences in preferences and economic behavior at a young age.

Diss. Stockholm : Handelshögskolan, 2011

Individuals experience risk ubiquitously, but measuring risk taking is difficult. The balloon analogue risk task (BART) was developed in order to assess risk taking through having subjects press a key that accrues reward but also risk losing all reward with each press. In humans, greater responding in this task is associated with other maladaptive risk taking behaviors. The present research modeled this relationship in pigeons due to their previously shown propensity towards risk taking behavior. Experiment 1 used an unsignaled balloon task in which losing could only occur after 5 pecks. Results showed below optimal performance with greater pecks associated with faster acquisition of risk taking in the suboptimal choice task and evidence of modulation by delay discounting measures. Experiment 2 signaled the number of pecks with colors and tested multiple hoppers as a reinforcement modality to increase performance. Results showed only signaling the number of pecks improved performance and was related to performance in the high risk BART task. Both the low and high risk variants were associated with slower suboptimal choice acquisition and again had evidence of modulation by delay discounting measures. Potential shared underlying mechanisms are discussed.

Over the past decades, decision making under risk has garnered a great amount of attention both in the field of economics and psychology. Although state-dependent variabilities of risk taking are well-documented, little is known about the effects of a person’s preferred time of day, or chronotype, in risky decision making. Under circumstances of circadian mismatch (e.g., when an “early bird” makes decisions in the evening), research suggests that decision making may reflect a greater reliance on heuristics, such as using stereotypes in social judgments. However, the effects of circadian mismatch on heuristics in risky decision making are relatively unexplored. This paper looks into the effects of circadian mismatch on the reflection effect: a behavioral bias in financial decision making, wherein individuals are risk averse when facing potential gains, and risk seeking when facing potential losses. Participants will be randomly assigned to their circadian matched or circadian mismatched conditions and will play a series of financial gambling tasks with real monetary incentives. This study predicts that the reflection effect will be exacerbated in circadian mismatched individuals as compared to matched participants. Exploring such an effect could have real-world implications on decision making under risk by providing critical knowledge about the effects of time of day on our susceptibility to behavioral biases. It could therefore point to the existence of a more optimal time of day to engage in such critical decision making.

Rural inhabitants of developing countries face extraordinarily risky environments, and decision-making under risk has crucial implications for the welfare of the rural poor. Therefore, obtaining a better understanding of the behaviour under risk of low-income populations is a vital step in the comprehension of human behaviour, and is important for effective policy design and evaluation, as well as for shedding light on production, investment and technology adoption decisions. In Chapter One, I analyze data collected from a laboratory experiment involving poor subjects in rural Ethiopia, in order to determine which decision models (and corresponding risk preferences) best describe the decision-making under risk of inhabitants. I find that expected utility theory (EUT) does not provide a good overall description of the decisions made by participants in the experiment; instead, there is evidence of probability weighting and loss aversion, implying that rank-dependent and reference-dependent choice models are more likely to represent the true latent decision-making process of subjects. In Chapter Two, I analyze combined experimental and survey data from rural Ethiopia in order to evaluate the determinants of risk preferences as well as assess the degree of asset integration in experimental decisions. Analyzing both EUT and non-EUT decision models and using an instrumental variable strategy, I find that household wealth negatively affects both risk aversion and loss aversion, but independent background risk has no effect on risk preferences. Further, I find evidence of narrow framing, as opposed to asset integration, suggesting that participants make decisions in the experiment in isolation from outside wealth. In Chapter Three, I analyze experimental data from Brazil to evaluate whether subjects understand decision problems that use the complex Multiple Price List (MPL) elicitation procedure, and to determine which decision models best describe observed choices. I find that the MPL decision problems of the experiment enable a finer characterization of risk preferences as compared to Ordered Lottery Selection problems (used in the Ethiopian experiment). However, I find that a significant fraction of choice patterns in the MPL problems are intransitive, and the evidence indicates that subjects did not properly understand the decision problems and thus observed choices do not reveal true risk preferences. Therefore, the relatively complex MPL procedure may not be suitable for experiments conducted with poorly-educated subjects in developing country settings. Chapter Four presents a theory outlining the relationship between rational demand for index insurance – for which the net transfer between insurer and policyholders depends only on a publicly verifiable index – and wealth. Further, the validity of this theory is tested using the experimental data from Ethiopia. In line with the theoretical model presented, due to basis risk and actuarially unfair premiums, demand for index insurance is hump-shaped – first increasing then decreasing – in wealth. The results indicate that the low take-up of this product observed among the poorest (and most risk averse) individuals in recent field studies may result from rational choice rather than credit constraints or poor decision-making.

There has been increased interest in understanding the economic preferences of adolescents in the last decade. However, the literature is still in its infancy in that we have only an incomplete picture of the economic preferences of young people. This thesis aims to contribute to this literature by investigating the risk and time preferences of adolescents. In the first chapter, we investigate if people generally show present bias (β) and what factors lead to the heterogeneity across studies using meta-analysis. We construct the largest and most comprehensive dataset of β estimates (62 papers, 81 estimates). The literature shows that people are on average present biased towards money (β=0.82), but there is substantial heterogeneity across studies. People show stronger present bias towards real effort and health outcomes compared to money. Finally, we find evidence of selective reporting and publication bias in the direction of overestimating present-bias, but that present bias still exists after correcting for the biases. In the second chapter, with a longitudinal experiment, we investigate adolescents’ time preferences towards money and food. We find that adolescents show strong present bias for money and food. The individual measures of present bias are moderately correlated across reward types. Our data also allows us to relate present bias measures elicited in a laboratory task to field behaviours including drinking, smoking, BMI and grades. We find that measures of time preferences over money and food predict field behaviours equally well. In the third chapter, with a laboratory experiment, we investigate changes in adolescents’ risk preference under peer observation. The experiment allows us to separately estimate participants’ loss aversion and risk tolerance in gains and losses in private and when observed by a peer sitting next to them. We conduct our experiment with 12-17 and 18-24 years old adolescents and find that while observed by peers, 18-24 years old adolescents choose risky prospects more often. This is driven by more risk tolerance both in gains and losses, rather than reduced loss aversion. For 12-17 years old adolescents, neither their risk tolerance nor their loss aversion is affected by peer observation.

Lo studio presenta un analisi dettagliata sul comportamento dei giocatori d'azzardo. I dati sono stati raccolti tramite un esperimento condotto “sul campo” che ha osservato i giocatori durante la loro attività di gioco in un agenzia di scommesse. L'esperimento ha permesso di ottenere il grado di severità del disordine da gioco d’azzardo e i principali tratti comportamentali dei partecipanti. La misurazione di tali tratti ha permesso di comprendere quali tra questi, meglio prediceva l’insorgere del disordine da gioco d’azzardo. La seconda parte del lavoro è stata rivolta a studiare la possibile relazione causale tra attività di gioco e una possibile modifica dei tratti comportamentali. Inoltre la diretta osservazione dei giocatori durante l’attività di gioco ha permesso di avere una traccia dettagliata del loro comportamento di gioco. I risultati sottolineano importanti differenze tra i comportamenti dei giocatori osservati usando procedure sperimentali e i comportamenti osservati durante l’attività di gioco. Nel primo caso non è stato rilevato nessun impatto significativo sulle preferenze individuali dovuto all’attività di gioco. Nel secondo caso, invece, si trova conferma del fenomeno conosciuto come “diminishing sensitivity”. In altre parole, all’aumentare delle perdite subite durante l’attività di gioco aumenta la propensione al rischio dei giocatori.
The thesis presents a lab-in-the-field experiment collecting data on gamblers’ behaviour. The study provides an estimate of the incidence of Problematic Gambling (PG) among the usual customers of a large betting agency in Milan. We elicit in an incentivized manner a large battery of behavioural traits in order to investigate which of them are mostly characterizing PG. Moreover, we investigate a causal relationship between gambling activity and behavioural traits. We also keep detailed track of the gambling activity during the day of the interview to see which are the more interest patterns of the gambling activity. The results underline important differences between real and experimental observation. When we use experimental task to investigate a possible variation in risk preferences due to gambling activity we do not observe any significant impact on risk preferences. When we inspect risk preferences using data coming from the real gambling activity we find evidence of the diminishing sensitivity phenomenon. The more losses they have collected during gambling, the more is the risk that gamblers are likely to take in the subsequent bets. These results indicate that gamblers are not risk-seekers in general, but their risk propensity seems to rise when they are involved in gambling.

Lo studio presenta un analisi dettagliata sul comportamento dei giocatori d'azzardo. I dati sono stati raccolti tramite un esperimento condotto “sul campo” che ha osservato i giocatori durante la loro attività di gioco in un agenzia di scommesse. L'esperimento ha permesso di ottenere il grado di severità del disordine da gioco d’azzardo e i principali tratti comportamentali dei partecipanti. La misurazione di tali tratti ha permesso di comprendere quali tra questi, meglio prediceva l’insorgere del disordine da gioco d’azzardo. La seconda parte del lavoro è stata rivolta a studiare la possibile relazione causale tra attività di gioco e una possibile modifica dei tratti comportamentali. Inoltre la diretta osservazione dei giocatori durante l’attività di gioco ha permesso di avere una traccia dettagliata del loro comportamento di gioco. I risultati sottolineano importanti differenze tra i comportamenti dei giocatori osservati usando procedure sperimentali e i comportamenti osservati durante l’attività di gioco. Nel primo caso non è stato rilevato nessun impatto significativo sulle preferenze individuali dovuto all’attività di gioco. Nel secondo caso, invece, si trova conferma del fenomeno conosciuto come “diminishing sensitivity”. In altre parole, all’aumentare delle perdite subite durante l’attività di gioco aumenta la propensione al rischio dei giocatori.
The thesis presents a lab-in-the-field experiment collecting data on gamblers’ behaviour. The study provides an estimate of the incidence of Problematic Gambling (PG) among the usual customers of a large betting agency in Milan. We elicit in an incentivized manner a large battery of behavioural traits in order to investigate which of them are mostly characterizing PG. Moreover, we investigate a causal relationship between gambling activity and behavioural traits. We also keep detailed track of the gambling activity during the day of the interview to see which are the more interest patterns of the gambling activity. The results underline important differences between real and experimental observation. When we use experimental task to investigate a possible variation in risk preferences due to gambling activity we do not observe any significant impact on risk preferences. When we inspect risk preferences using data coming from the real gambling activity we find evidence of the diminishing sensitivity phenomenon. The more losses they have collected during gambling, the more is the risk that gamblers are likely to take in the subsequent bets. These results indicate that gamblers are not risk-seekers in general, but their risk propensity seems to rise when they are involved in gambling.

L'equity crowdfunding (da qui ECF) è un fenomeno recente che porta la finanza imprenditoriale a sfruttare le innovative strutture digitali che consentono alle imprese di ottenere finanziamenti alternativi: gli imprenditori nascenti possono raccogliere capitali da una folla di investitori, che generalmente contribuiscono con modesti importi individuali, durante una campagna online per un certo periodo. L’ECF rappresenta una forma innovativa di finanziamento sia per le startup ai primi stadi di sviluppo che per le imprese. Seguendo un approccio di ordine gerarchico, gli imprenditori potrebbero optare per questo schema di finanziamento alternativo nel caso in cui i fondi interni, il debito da terzi o il capitale esterno potrebbero non essere sufficienti o disponibili. L’ECF appartiene all'ambiente Fintech e quindi al quadro teorico della finanza digitale. Sfrutta la disponibilità di piattaforme digitali in grado di supportare gli imprenditori nel superamento dei vincoli finanziari, particolarmente rilevanti nelle fasi iniziali delle iniziative. Gli investitori in ECF devono prendere decisioni in un ambiente altamente rischioso, con alti livelli di incertezza. Inoltre, i potenziali profitti (se presenti) sarebbero apprezzabili solo a lungo termine e sono soggetti sia a rischi di liquidità che di mercato. Pertanto, la valutazione del profilo di rischio-rendimento di un progetto di investimento si basa su una moltitudine di fattori e comprende un ampio spettro di discipline. Tutto questo spiega perché la recente letteratura sul crowdfunding abbia seguito una rapida crescita, e perché molti autori abbiano studiato l'ECF da varie prospettive e discipline, seguendo punti di vista complementari per capire cosa convince il pubblico a investire, determinando il successo o il fallimento di una campagna di raccolta fondi. La tesi si concentra sull'equity crowdfunding dal punto di vista sia degli imprenditori che degli investitori. Lo scopo di questa ricerca è quello di analizzare le dinamiche delle campagne di finanziamento su piattaforme di ECF e identificare le determinanti del successo. Supponendo che gli investitori perfezionino il loro processo decisionale attraverso l'apprendimento derivante dall’osservazione di vari segnali, le impostazioni empiriche ipotizzano che una cascata di informazioni provenienti da fonti diverse abbia un impatto sull'esito della campagna inducendo comportamenti imitativi. La tesi è strutturata come una raccolta di articoli ed è organizzata in tre studi. Il primo studio consiste in una revisione sistematica e bibliometrica della letteratura sulle determinanti del successo o del fallimento di una campagna di raccolta di equity crowdfunding, con particolare leva sulla tecnica del signalling come strumento per alleviare le asimmetrie informative da parte degli imprenditori/management, ed è volto ad individuare i gap di ricerca ove inserire i due studi successivi. Il secondo lavoro si pone nella prospettiva degli investitori ed osserva, grazie ad un esperimento di scelta, le decisioni d’investimento, verificando empiricamente la gerarchia delle fonti che condizionano maggiormente la disponibilità ad investire. Si assume infatti che gli investitori retail perfezionino il proprio quadro decisionale attraverso l’osservazione di cascate informative derivanti da soggetti più informati/esperti. Il terzo studio mira ad esaminare, ponendosi ora nella prospettiva degli imprenditori e delle imprese, i fattori derivanti dalle cascate informative in grado di influenzare l’esito di una campagna di finanziamento. Applicando la Theory of Planned Behavior, infatti, l’obiettivo di questo terzo lavoro è di passare dalle intenzioni di investimento, studiate sperimentalmente, al comportamento concreto degli investitori, osservando dati reali di campagne di raccolta effettivamente concluse. ​
Equity crowdfunding (hereafter ECF) is a recent phenomenon that leads entrepreneurial finance to take advantage of innovative digital facilities allowing ventures to obtain alternative financing: nascent entrepreneurs can raise capital from a crowd of investors, who generally contribute with modest individual amounts, during a web-based campaign for a certain period. ECF represents an innovative form of seed financing for new ventures. Following a pecking order approach, entrepreneurs might opt for this alternative financing scheme in the case that internal funds, external debt or external equity might not be sufficient or available. ECF belongs to the Fintech environment and thus to the digital finance theoretical framework. It exploits availability of digital platforms able to support entrepreneurs in overcoming financial constraints, particularly relevant in the initial steps of ventures. Investors in ECF must take decisions in a highly risky environment, with high levels of uncertainty. Moreover, potential profits (if any) would be appreciable only in a longer term and are subject to both liquidity and market risks. Therefore, the evaluation of the risk-return profile of an investment project is based on a multitude of determinants and encompasses a wide spectrum of disciplines. All this explains why recent crowdfunding literature has followed rapid growth, and many authors have studied ECF from various perspectives and disciplines, following complementary points of view to understand what convinces the public to invest, determining the success, or failure of a fundraising campaign. The thesis focuses on the equity crowdfunding from the perspectives of both entrepreneurs and investors. The theoretical background is built upon a multidisciplinary integrative framework. The aim of this research project is to analyse the dynamics of funding campaigns of new ventures on ECF platforms and identify the determinants of success. Assuming that investors refine their decision-making through observational learning of various signals, the empirical settings hypothesize that an information cascade from different sources impacts on the outcome of the campaign by inducing herding. The thesis is structured as a collection of papers and is articulated in three studies. The first study consists of a systematic and bibliometric review of the literature on the determinants of the success or failure of an equity crowdfunding campaign, with particular leverage on the signaling technique as a tool to alleviate information asymmetries by entrepreneurs/management and is aimed at identifying the research gaps where to position the two subsequent studies. The second study follows the perspective of investors and is part of the literature of information cascade and herding. It observes investment decisions in the context of equity crowdfunding through a choice experiment with the aim to empirically verify the hierarchy of sources that affect the willingness to invest. In fact, it is assumed that retail investors perfect their decision-making framework through the observation of information cascades deriving from more informed/experienced parties. The third study examine the perspective of entrepreneurs. The aim is to identify the signals that affect the outcome of a funding campaign, among those conveyed via information cascades. Following the Theory of Planned Behavior, in fact, the objective of this third work is to move from investment intentions (study 2; analyzed experimentally) to the concrete behavior of investors (observed in real data). ​

Personal insolvency is a widespread mechanism to provide debt relief to overburdened individuals. Despite its prevalence, decision-making in personal insolvency is not well understood. This thesis employs innovative behavioural approaches to explore i) concepts and methods best suited to empirically examine personal insolvency decisions, ii) the way in which individuals choose between available personal insolvency options, iii) the effects of public attitudes towards these options, and iv) the role of personal insolvency’s public records in incentivising desirable behaviours. In doing so, this thesis contributes novel methodological approaches and addresses key public policy issues in the regulation of personal insolvency law.

While previous studies have investigated country-of-origin effect from various angles, it remained unexplored the extent to which Country of Origin Labeling (COOL) affects U.S. beef imports from specific countries. Using choice-experiment data, willingness to pay (WTP) for Australian, Canadian beef in addition to other enhancement attributes were estimated with a Mixed Logit Model and a Latent Class Model. The results revealed unobserved taste heterogeneity and important differences in the WTP between the imported and domestic steak. The Latent Class Model estimated the range of discount needed for consumers to switch from U.S. to Canadian steak was a range from $1.09 to $35.12 per pound. Results from the Mixed Logit Model reiterated strong domestic preference. Significant positive WTP for BSE-tested, traceable, and tenderness-assured beef were also observed. In addition, perceived risk theory was utilized to explain the difference in WTP for domestic and imported beef. The psychometric method proposed in Pennings et al. (2002) were adopted, which disentangled perceived risk into risk perception and risk attitude. Using a mixed logit model with error component specification, the result revealed a strong link between risk perception and risk attitude towards consumer choice of country-of-origin labeled beef. Specifically, we found that perceived risk factors have a stronger impact on imported beef than domestic beef, which could partially explain consumers’ aversion towards imported beef. Lastly, the perceived risk framework was expanded to explain variation in the WTP for traceable and BSE-tested beef. The results indicated significant and non-linear impact from risk attitude and risk perception to WTP for the attributes. In addition, BSE-concern, and perceived level of control agribusiness has on food safety significantly influenced WTP for traceable and BSE-tested beef.

Intresset för fondsparformen har ökat de senaste åren och med tanke på att åtta av tio svenskar sparar i fonder är det viktigt att undersöka vad det är som påverkar hur en fond presterar utifrån vem som förvaltar fonden.    Syftet med studien är att bidra med ökad kunskap kring vad det är som påverkar en fondförvaltares prestationer. Studien avser först att undersöka den enskilda fondförvaltarens prestation i form av riskjusterad avkastning utifrån de demografiska aspekterna. Därefter undersöks om grupper presterar bättre eller sämre riskjusterad avkastning än enskild individer och slutligen undersökes om gruppers diversitet, utifrån de demografiska aspekterna, påverkar fondens prestation också mätt i riskjusterad avkastning.   Studien utgår från ett positivistiskt synsätt och en forskningsstrategi med en deduktiv ansats. Metodvalet karaktäriseras av ett kvantitativt tillvägagångssätt där empirin grundar sig på icke-indexfonder i Morningstars kategorisering Sverigefonder.   Studiens övergripande slutsatser är att de olika demografiska aspekterna har olika påverkan på den riskjusterade avkastningen. Grupper presterar generellt sämre än enskilda individer och ju mer diversifierad gruppen är desto sämre blir också resultatet.
The interest of saving in funds has risen in recent years. Since eight of ten Swedes have got savings in funds it’s important to investigate what affects the funds’ performance, based on who manages the fund.   The purpose of the study is to contribute with increased knowledge about what affects the performance of fund managers. The focus of the study is firstly on different demographic aspects and how they affect the risk-adjusted returns. Secondly the study examines whether group performances are superior to individuals. Lastly the study also examines whether more diverse groups perform better than less diverse groups.   The study is based on a positivistic approach and a research strategy with a deductive approach. The method selection is characterized by a quantitative approach where data is based on non-index funds in the Morningstar categorization of Sverigefonder.   The overall conclusions of the study is that different demographical aspects have different effects on the risk-adjusted returns. Groups generally perform worse than individuals and the study also concludes that the more diversified the group gets, the worse the results will be.

This thesis is an investigation into the microeconomic mechanisms that govern some of the occupational choices faced by workers in Sub-Saharan Africa, and into the monetary and non-monetary returns to their decisions. Chapter 1 begins by exploring the decision process that leads workers to allocate themselves to different occupations within the economy. In particular, I investigate the role of risk-aversion in the allocation of workers between formal and informal jobs in Ghana, hence attempting to explain a fundamental dimension of duality through an investigation into workers' preferences. In my model of sectoral allocation risk-averse workers can opt between entering the free-entry informal sector and queuing for formal occupations. Conditional on identifying the riskier option, the model yields testable implications on the relationship between risk-aversion and workers' allocation. My testing strategy proceeds in two steps. First, using the first three waves of the Ghana Household Urban Panel Survey (GHUPS) dataset, I estimate expected income uncertainty and find it considerably higher in the informal sector than in formal employment. Second, using experimental data to elicit risk-attitudes I estimate the effect of risk-aversion on occupational choices and I find that, in line with the first result, more risk-averse workers are more likely to queue for formal jobs and less likely to be in the informal sector. The conclusion of the first chapter is that attitudes to risk should feature more prominently in models of sector allocation and in the design of labour market policies, in particular when those policies aim to impact workers' vulnerability to risk and uncertainty. Chapter 2 focuses on the largest occupational category in the Developing world, self-employed workers with small productive activities, and it tries to estimate the returns to different productive assets, namely physical capital, labour and human capital. These are the workers that form most of the informal sector analysed in chapter 1, which allows me to draw a direct link with the analysis so far. The chapter begins by specifying a model for the income-generating process grounded in the literature on firms' production and hence abridging the gap between the analysis of individual earnings and the study of firms' value added. Identification in the empirics is achieved by means of panel estimators that are suitable to address the endogeneity of input choices, which derives from both time-varying and time-invariant unobservable heterogeneity. The use of these estimators is made feasible by the length of the Ghanaian Household Urban Panel Survey dataset at CSAE. I also explore issues of endogeneity in the selection of different technologies, defined by their relative capital and labour intensity. Finally, I analyse the shape of returns to capital, with the aim to detect potential non-convexities in technology. The results show that capital and work-experience play the strongest role in income-generation, while the shares of value added attributed to labour and to formal schooling are low. Marginal returns to investment are high at low capital levels and they decrease very rapidly, pointing against the existence of non-convexities due to minimum scale requirements, but implying that real income gains resulting form micro-investment are modest. Chapter 3 returns to the issue of earnings uncertainty and risk-aversion explored in Chapter 1, but it now takes the allocation choice as given and explores the direct welfare implications of income uncertainty for worker's well-being. Namely, the chapter explores the relationship between income and welfare, with a particular attention on the link between income vulnerability and happiness. Using unique longitudinal data on life-satisfaction and labour market outcomes, I estimate an individual measure of vulnerability (defined as the probability of falling below a low-income threshold) and investigate its effect on well-being. After controlling for unobservable individual fixed effects, work-satisfaction, relative income and other relevant worker characteristics, I find a sizable impact of vulnerability, over and above the income effect. When I explore the mechanisms behind my results, I find that aspiration adaptation to current income may result in a transitory income effect. Moreover, using my direct measure of attitudes to risk from field-experiments (already used in chapter 1), I can test directly the hypothesis that more risk-averse agents suffer more heavily from a given increase in income vulnerability. Overall, my findings support policy interventions that aim to reduce vulnerability, as I expect such policies to have a 'direct' impact on agents' happiness given the prevailing attitudes to risk and uncertainty in the population. Finally, from the point of view of overall social welfare, my results suggest that non-Rawlsian growth models, whereby 'someone may be left behind', may fail to enhance general welfare, for high enough levels of risk-aversion in the population, if the risk of falling behind is sufficiently widespread.

Diese Dissertation erforscht, auf welchen unterschiedlichen Wegen Informationsverarbeitung Investitionsentscheidungen beeinflusst. Auf der Basis kontrollierter Laborexperimente wird untersucht, wie Entscheidungen mit der Art der Information sowie mit dem Entscheidungskontext variieren. Im ersten Kapitel legt ein Experiment die Schwierigkeit mit hypothetischem Denken bzw. mit dem Lernen aus hypothetischen Ereignissen offen. Im Kapitel Zwei untersucht ein anderes Experiment, wie Informationsverarbeitung die Reaktionen der Investoren auf Ambiguität verändert, denn ein eindeutiges, optimales Lernverhalten gibt es unter Ambiguität nicht. Das letzte Kapitel stellt anhand desselben Experiments die Unabhängigkeit zwischen dem Lernprozess und den Risikopräferenzen in Frage.
This dissertation investigates various channels through which information processing affects investment decisions. Controlled laboratory experiments allow for studying how subjects’ decisions vary with the type of information and the decision-context. The experiment in the first chapter discloses the difficulty with contingent reasoning, i.e. learning from hypothetical events. A different experiment in Chapter Two analyzes how information processing changes investors’ reactions to ambiguity—an environment with multiple rational learning rules. Using the same experiment, the last chapter questions the independence between belief updating and risk preferences.

Börsåret 2020 har varit ett unikt år som präglats av ett kraftigt börsras, men även en historiskt snabb återhämtning. Det unika händelseförloppet härrör ur en pandemi orsakad av ett coronavirus, vilket skapat nya underlag för studier av investerares beslutsfattande ur ett börspsykologiskt perspektiv. Syftet med studien var att kartlägga vilka börspsykologiska faktorer som indikerats hos investerare under pandemin. Intentionen var att undersöka huruvida det förelåg samband mellan börspsykologiska faktorer och investerares beslutsfattande. Studien har främst tillämpat en kvantitativ metod i form av en tvärsnittsdesign för att uppnå generaliserbarhet, men har även inslag av kvalitativ forskningsdesign för att erhålla en djupare förståelse. I syfte att besvara studiens forskningsfrågor har en statistisk analys i form av bivariata och multivariata linjära regressionsanalyser genomförts. Resultatet visar att samtliga undersökta börspsykologiska faktorer indikeras hos investerare och att det existerar ett flertal signifikanta samband mellan faktorerna och investerares beslutsfattande. Vidare har studien uppmärksammat en problematik i investerares självuppfattning och brister i de tillämpade testerna för börspsykologiska faktorer. Slutligen har en modell framtagits i syfte att bistå med underlag som kan öka förståelsen och medvetenheten inom ämnesområdet och således skapa bättre förutsättningar för rationella investeringsbeslut.
The stock market during 2020 has been a remarkable year that has experienced a major marketcrash, but also a historical recovery. The unique course of events derives from a pandemic causedby a coronavirus, which has generated new data for research of investors’ decision making from abehavioral finance perspective. The purpose with the research was to map biases which havebeen indicated by investors during the pandemic. The intention was also to investigate whetherthere were relationships between biases and the decision making of investors. This thesis hasmainly applied a quantitative method in the form of a cross-sectional study to achievegeneralizability, but it also has elements of qualitative research to obtain a deeper understanding.In order to answer the research questions, a statistical analysis in the form of bivariate andmultivariate linear regression models has been applied. The result concludes that all theinvestigated biases were indicated, and several significant relationships between the biases andthe decision making of the investors. Furthermore, the research has shown two problematicaspects. The first is the self-perception of investors and the second is the weaknesses of theapplied tests for biases. Finally, a model has been developed with the aim to contribute withuseful research that can create better conditions for rational investment decisions through anincreased understanding and awareness in the area of behavioral finance.

This thesis uses laboratory experiments to develop a methodology to estimate the expected welfare benefits of insurance for individuals, conditional on their risk preferences. This methodology is then applied to study the welfare effects of issues that impact microinsurance, or insurance for the poor. The first result is that insurance take-up not a good proxy for the expected welfare gain of an individual’s choice to purchase or not to purchase insurance. The second result is that basis risk reduces the welfare obtained from index insurance. This welfare is significantly improved by having greater behavioral consistency with the Reduction of Compound Lotteries axiom. Finally, the risk of contract non-performance from the insurer significantly reduces the welfare obtained from insurance purchase decisions.

Název / Title Eseje o rozhodování pod stresem / Essays on Decision Making under Stress Student PhDr. Lubomír Cingl Studijní program / Study program Ekonomické teorie Školitel / Advisor PhDr. Michal Bauer, Ph.D. Abstract This dissertation comprises three thematically connected experimental studies of human behavior under non- standard conditions: time-pressure and stress. In the Introduction section I present the argument for why it is important for economists to recognize stress research as a valid part of the research in economics and how it can contribute to the growing knowledge of human behavior in general, including several examples from the literature. The first paper presented in Chapter 2 examines the effect of time pressure on the individual propensity to herd, while the remaining two papers examine the effect of acute stress on risk-preferences and herding behavior, respectively. Herding behavior is a very important phenomenon in human decision making since social influence is very frequent in our lives and economic decisions: consider traders in financial markets, wait-and-see investors, but also purchase behavior due to fads, fashion and top-ten lists. Risk preferences are another essential factor which determines many important economic outcomes, and the assumption of their stability is a...

This thesis is an investigation of how subjects behave in an individual binary choice decision task with the option to purchase or observe for free additional information before reaching a decision. In part 1 of this thesis, an investigative study is conducted with the intent to sharpen the view to literature concerning corresponding psychology and economics experiments designed to test decision tasks that involve purchasing and observing information from an imperfect message prior to taking a terminal action choice. This investigative study identifies areas of research that warrant further investigation as well as provides enhancements for execution in the subsequent experiment conducted in Part 2 & 3 of this thesis. In Part 2 & 3, I conduct an experiment to test how subjects behave in an individual binary choice decision task with the option to purchase or observe for free additional information before reaching a final decision. I find that subjects’ behaviour over time converges toward optimal decisions prior to observing an imperfect information signal. However, when subjects observe an imperfect information signal prior to their terminal choice there is greater deviation from optimal behaviour. I find in addition to behaviour that is reflective of a risk-neutral BEU maximizer, status quo bias, over-weighing the informational value of the message received and past statistically independent outcomes influencing future choices. The subjects’ willingness to pay (WTP) to use the additional information gathered from an imperfect message service when making a final decision was on average less than the risk neutral BEU willingness to pay benchmark. Moreover, as the informative value of the message increased, causing the BEU valuation to increase, subjects under-estimated the value of the message signal to a greater degree. Although risk attitudes may have influenced the subjects’ WTP decisions, it does not account for the increased conservative WTP behaviour when information became more valuable. Additionally, the findings from this study suggest that individuals adopt different decision rules depending on both personal attributes (i.e. skillset, gender, experience) and on the context and environment in which the decision task is conducted.
SSHRC grant: Social Sciences and Humanities Research Council via Dr. Bram Cadsby Professor Department of Economics, University of Guelph