Article
Economics
Deqing Zhou, Fang Zhen
Summary: A dynamic strategic trading model was built to study the correlation between noise trading demand and asset fundamental value, which impacts the temporal properties of a perfect Bayesian equilibrium. The correlation coefficient influences how quickly prices incorporate private information. Market liquidity deteriorates if a large amount of private information cannot be revealed due to a negative correlation and the presence of only one risk-neutral insider. Efficiency issues caused by negatively correlated noise demand can be resolved by competitive insiders or risk-averse ones.
ECONOMIC MODELLING
(2021)
Article
Development Studies
Ashenafi Duguma Feyisa, Miet Maertens, Yann de Mey
Summary: This paper explores the diversity in risk perception and risk preferences of Ethiopian households by combining incentivized field experiments with detailed primary household survey data. The study finds that the respondents are exposed to multiple past and future agricultural risks, and exhibit characteristics of relative risk aversion, loss aversion, and overweighting of unlikely extreme outcomes. The findings highlight the significant association between risk preferences and risk perception, providing valuable insights for better informed and targeted risk management policy interventions.
Article
Management
Andres Fioriti, Allan Hernandez-Chanto
Summary: This study explores the behavior and effects of risk-averse bidders in security design auctions, finding that steeper securities attract more aggressive bidding from risk-averse bidders, resulting in increased allocative efficiency of the auction. Furthermore, the study analyzes the relationship between security design and auction formats.
MANAGEMENT SCIENCE
(2022)
Article
Green & Sustainable Science & Technology
Mehdi Bensouda, Mimoun Benali
Summary: The Moroccan manufacturing sector consumes 24% of the country's total energy production. Morocco is prioritizing energy efficiency due to growing energy consumption. This study examines the impact of mimetic pressure and financial slack on risk aversion and energy efficiency practices in manufacturing companies in Morocco. The results show that risk aversion is negatively correlated with energy efficiency practices, while both mimetic pressure and financial slack positively influence energy efficiency practices. These findings highlight the importance of mimetic pressure in reducing risk aversion and promoting energy efficiency practices.
Article
Psychology, Multidisciplinary
Zenan Sun, Shen Lu, Man Huang, Jincai Zhuang, Andrea Maria Vaca Lucero, Charles Dwumfour Osei
Summary: This paper examines the influence of contract performance rates on entrepreneurs' risk attitudes through the mediation of subjective well-being, as well as the moderating effect of the regional business environment on this relationship. The results show that contract performance rates have a significant positive indirect effect on entrepreneurs' risk aversion through improved subjective well-being. The regional business environment plays a negative regulatory role in the relationship between contract performance rates and entrepreneurs' risk aversion.
FRONTIERS IN PSYCHOLOGY
(2023)
Article
Humanities, Multidisciplinary
Tomas Folke, Giulia Bertoldo, Darlene D'Souza, Sonia Ali, Federica Stablum, Kai Ruggeri
Summary: A study compared boosts and nudges as interventions, finding boosts more effective for maximizing gains and nudges more effective for minimizing losses in risky decision-making. Boosts promote risk-taking when beneficial, while nudges have a consistent, albeit lesser impact regardless of the benefit of risk-taking.
HUMANITIES & SOCIAL SCIENCES COMMUNICATIONS
(2021)
Article
Multidisciplinary Sciences
Crystal Reeck, O'dhaniel A. Mullette-Gillman, R. Edward McLaurin, Scott A. Huettel
Summary: This research assessed the relative contribution of domain-general and domain-specific risk attitudes to financial risk taking. The results showed that domain-general risk attitude had a better predictive power for observed financial decision-making behavior than domain-specific financial risk attitudes.
Article
Computer Science, Artificial Intelligence
Lorenzo Bisi, Davide Santambrogio, Federico Sandrelli, Andrea Tirinzoni, Brian D. Ziebart, Marcello Restelli
Summary: This paper introduces a unified framework to optimize various risk measures, including conditional value-at-risk, utility functions, and mean-variance. By leveraging recent theoretical results on state augmentation, the decision-making process is transformed to optimize in the transformed environment, and a simple risk-sensitive meta-algorithm is presented to optimize risk-neutral policy. Extensive experiments demonstrate the advantages of this approach over existing ad-hoc methodologies in different domains.
ARTIFICIAL INTELLIGENCE
(2022)
Article
Management
Loic Berger, Louis Eeckhoudt
Summary: Risk aversion positively affects the value of diversification, but ambiguity aversion may not necessarily have the same effect. Contrary to economic intuition, ambiguity and ambiguity aversion could actually reduce the value of diversification.
MANAGEMENT SCIENCE
(2021)
Article
Business, Finance
Tao Tang, Ronghua Luo, Jing Gu
Summary: In this article, we propose an optimal lifetime asset allocation model that considers both long-run risk and time-varying risk aversion. Our model accounts for the uncertainty and correlation of long-run returns and volatility. Based on data from the American Consumer Expenditure Survey and macroeconomic data, we find that an individual's risk attitude generally increases with age and has a significant impact on their asset allocation choice. We also find that correlations between returns and volatility affect an individual's choice and that the economy has a clear business cycle path.
INTERNATIONAL REVIEW OF ECONOMICS & FINANCE
(2023)
Article
Business, Finance
Hyeongwoo Kong, Wonje Yun, Woo Chang Kim
Summary: With the increased accessibility of the financial sector to retail investors, determining their risk propensity has become crucial. This research examines the correlation between the existing method of analyzing customer risk aversion and actual investment outcomes. Using investment data and risk propensity survey results from 370,000 customers of a South Korean investment company, the study finds an insignificant correlation between the two factors. A new method employing the Xgboost model is proposed for identifying customers' actual risk aversion.
FINANCE RESEARCH LETTERS
(2023)
Article
Clinical Neurology
Luis Manssuer, Qiong Ding, Yingying Zhang, Hengfeng Gong, Wei Liu, Ruoqi Yang, Chencheng Zhang, Yijie Zhao, Yixin Pan, Shikun Zhan, Dianyou Li, Bomin Sun, Valerie Voon
Summary: Neurons in the primate lateral habenula fire in response to punishments and are inhibited by rewards. By recording local field potentials directly from the habenula in human patients, the authors found that high-frequency gamma activity in the habenula encoded punishment, reward, and risk during decision-making tasks. These findings suggest that habenula high gamma could be used as a biomarker for closed-loop deep brain stimulation therapy in psychiatric disorders.
Article
Management
Xiang Li, Xiangtong Qi
Summary: This paper examines the impact of risk aversion on pricing and quality decisions in a firm. It is found that increasing risk aversion leads to lower optimal prices, higher optimal quality, and a simultaneous decrease in both price and quality when both are considered as decision variables. This mutual reinforcement effect between price and quality as strategic complements enhances the impacts of risk aversion on marginal profit and product price-performance.
OMEGA-INTERNATIONAL JOURNAL OF MANAGEMENT SCIENCE
(2021)
Article
Agronomy
Nurudeen Abdul Rahman, Asamoah Larbi, Bekele Kotu, Mary Otiwaa Asante, Daniel Brain Akakpo, Shaibu Mellon-Bedi, Irmgard Hoeschle-Zeledon
Summary: The study showed that maize-legume strip cropping in West Africa can significantly increase income, reduce operating risk, and save agricultural land compared to sole cropping.
Article
Business, Finance
Narongdech Thakerngkiat, Hung T. Nguyen, Nhut H. Nguyen, Nuttawat Visaltanachoti
Summary: This study examines the impact of the 9/11 terrorist attacks on investor risk aversion and corporate default risk. The findings show a significant increase in default risk at both market and firm levels following the attacks.
INTERNATIONAL REVIEW OF ECONOMICS & FINANCE
(2023)
