Behavioral Assumptions Research Articles

Application and Development of Behavioural Economics in Consumer Decision Making

Behavioural economics, as an interdisciplinary field integrating psychology and economics, offers new perspectives for understanding consumer decision-making. This paper provides an overview of the core theories of behavioural economics, its applications in consumer decision making, and its developments and challenges in market practice and policy making. First, behavioural economics challenges traditional economic assumptions about rational decision-making by revealing core concepts such as limited rationality, prospect theory and behavioural biases, providing a deeper understanding of consumer behaviour. Second, the paper explores the effectiveness of behavioural economics in practical applications, such as improving firms' market performance and policy implementation by optimising marketing strategies, utilising personalised recommendations and developing behavioural intervention policies. However, behavioural economics still faces challenges in terms of theoretical universality, cross-cultural applicability and dynamic adaptation. Future research directions include theoretical integration, cross-cultural validation, adaptation to technological developments, optimisation of policy practices and intersection studies with psychology. The review in this paper aims to provide reference for academic research and practical application, to promote the further development of behavioural economics, and to provide theoretical support for policy making and market strategies.

The Yin and Yang of banking: Modeling desirable and undesirable outputs

This paper introduces a novel by-production approach to modeling desirable and undesirable output production processes in the US banking sector. We utilize the structural proxy variable framework in which desirable outputs (different types of loans and other income-generating activities) are exogenous, which is a common practice in the banking literature. The undesirable output is non-performing loans (NPLs). To address the endogeneity of variable inputs (purchased funds and core deposits) in the production of desirable outputs, we employ an input distance function and rely on the bank’s cost-minimizing behavioral assumption. We specify the undesirable output technology as a function of desirable outputs as well as other factors such as total non-transaction accounts, undivided profits, and capital reserves. Using US commercial bank data from 2001 to 2020, we find that bank productivity exhibits steady growth in desirable outputs. Banks prioritize reducing the overall productivity impact of NPLs post-crisis, shifting focus from pre-crisis service provision.

“This Is What You Get When You Lead with the Arts”: Making the Case for Social Wellness

Like other key terms in the medical and health humanities—empathy, creativity, and reflection, to name just a few—wellness has become a weasel word, rife the language of optimization, duty, and self-perception. While alternative vocabularies exist—well-being and quality of life among them—these options usually privilege the objectives of academic (often psychological) research, health institutions, and the economic state apparatus, rather than people themselves. In mind of these concerns, why attempt to make a case for wellness at all? We present a historically informed, theoretically driven, praxis-guided framework for a renewed vision of social wellness (a concept first defined in the late 1950s). While definitions since Bill Hettler’s “hexagonal” model (1980) have included mutual respect for others and the assumption of cooperative behaviors, conspicuously absent from contemporary definitions and usage is any mention of the aesthetic realm, which we—alongside philosophers like Amartya Sen and Martha Nussbaum—take as a central human capability. How can the relational possibilities of arts engagement be understood as not just a means of promoting individual wellness, but also as a method and outcome of social wellness? We propose that social wellness is ultimately premised on the interplay between wellness of the collective and the strength of the relational encounters it engenders. We turn to a key practice paradigm—community arts engagement—as both a vehicle for and site of social wellness. With brief reference to a Canadian exemplar, we conclude with concrete recommendations for addressing critical opportunities for advancing arts-led social wellness initiatives involving academic and community partners.

Flexible emulation of the climate warming cooling feedback to globally assess the maladaptation implications of future air conditioning use

Abstract Rising affluence and a warming climate mean that the demand for air conditioning (AC) is rising rapidly, as society adapts to climate extremes. Here we present findings from a new methodological framework to flexibly couple and emulate these growing demands into a global integrated assessment model (IAM), subsequently representing the positive feedbacks between rising temperatures, growth in cooling demand, and carbon emissions. In assessing global and regional climate change impacts on cooling energy demand, the emulator incorporates climate model uncertainties and can explore behavioural and adaptation-related assumptions on setpoint temperature and access to cooling. It is also agnostic to the emissions and climate warming trajectory, enabling the IAM to run new policy-relevant scenarios (Current Policies, 2 °C and 1.5 °C) with climate impacts that do not follow Representative Concentration Pathways. We find that climate model uncertainty has a significant effect, more than doubling the increase in electricity demand, when comparing the 95th percentile cases to the median of the climate model ensemble. Residential AC cooling energy demands are expected to increase by 150% by 2050 whilst providing universal access to AC would result in the order of a 400% increase. Depending on the region, under current policies and limited mitigation, climate change could bring in the order of 10%–20% higher cooling-related electricity demands by 2050, and approximately 50% by 2100. Set point temperature has an important moderating role—increasing internal set-point from 23 °C to 26 °C, approximately halves the growth in electricity demand, for the majority of scenarios and regions. This effect is so strong that the change in set point temperature to both residential and commercial sectors outweighs the growth in demand that would occur by providing universal access to AC by 2050 to the 40% of the global population who would otherwise not afford it.

Numerical investigation of knee prosthesis stresses in daily activities: Insight into knee rehabilitation and Creation of a new optimal model

Total knee arthroplasty (TKA) is a cornerstone in addressing knee joint disorders, significantly enhancing patients' quality of life. However, despite technological advancements, a comprehensive understanding of the dynamic stresses experienced by knee prostheses during daily activities, particularly under rehabilitation interventions, remains elusive. This study aims to bridge this gap by employing numerical simulations and finite element analysis to elucidate these dynamic stresses and their interaction with rehabilitation protocols.A real-life knee replacement prosthesis model was meticulously constructed through coordinate measuring and 3D scanning, facilitating detailed finite element analysis in ANSYS Workbench version 17.1. Two distinct boundary conditions and loading scenarios were applied, with comparisons made between linear and nonlinear material assumptions. The simulation results using these different boundary condition methods revealed minimal differences. Specifically, at a knee angle of 0°, the relative stress error rate between the two boundary condition types was approximately 1 % (1.11 MPa and 1.099 MPa, respectively). At 15° and 90°, the error rates were 1.9 % and 0.56 %, respectively (10.275 MPa and 10.078 MPa at 15°; 10.275 MPa and 10.078 MPa at 90°). Given these minimal differences, the first type of boundary condition was adopted for the subsequent scenarios to enhance convergence efficiency in the analysis.Moreover, comparative analyses between linear and nonlinear material behaviors demonstrated acceptable agreement, offering insights into potential efficiency gains in simulation methodologies. Building on this foundation, an optimized tibial model was proposed, incorporating geometric alterations to the tray. Quantitative assessments revealed significant reductions, with von Mises stress decreasing by 23.35 % and equivalent strain by 17 % at a knee angle of 140°. Further evaluations at varying angles, including 60°, consistently showed positive influences on stress and strain. These quantitative findings not only contribute valuable insights into the mechanical behavior of knee prostheses but also provide tangible evidence for the efficacy of linear material behavior assumptions. The proposed optimized model exhibits promising potential for enhancing the design and performance of knee prostheses, particularly under critical loading conditions.In conclusion, these results underscore the importance of a nuanced understanding of knee prosthesis behavior during rehabilitation, offering a quantitative foundation for refining existing designs and informing the development of next-generation prostheses.

Expanding the Behavioral Assumptions and Empirical Approaches in Transaction Cost Economics

Expanding the Behavioral Assumptions and Empirical Approaches in Transaction Cost Economics

Cyclic inelastic behaviour of a bonded patch repair system used for pipes with through-wall corrosion damage

Repairs of through-wall corrosion damage in pipes conveying liquids using bonded metallic patches are becoming common in the oil and gas industry. Usually, this kind of patch is used in association with a composite sleeve, and it is essential to assure that the repair wońt leak. The use of bonded metallic patches associated with the composite sleeve is not forbidden in the standards for the design of composite repair systems (such as ASME PCC-2 and ISO 24817). However, they do not address this very frequent practice adopted in industry. Since the patch is responsible for sustaining most of the pressure of the repair, it becomes necessary to further understand its behaviour. This paper investigates the cyclic inelastic behaviour of a metal patch/adhesive system and its effect on the failure pressure. Hydrostatic tests were performed regarding how pressure variations can generate cyclic inelastic strains in the adhesive layer that bonds the metal patch to the pipe, and how this cyclic loading–unloading process ultimately affects the failure pressure. The failure pressure in monotonic burst tests can be reasonably modelled using basic concepts of linear elastic fracture mechanics. Although the assumption of a brittle-elastic behaviour of the repair system seems adequate in the case of monotonic loading, it is not in the case of cyclic tests with high pressure amplitudes. Repairs in steel pipes under pressure with a 25 mm diameter hole failed after a very small number of cycles with pressure amplitude of 80% of the average failure pressure obtained in monotonic burst tests. To help understanding the behaviour of the system, single lap joints were studied. The patch and pipe are not subjected to significant permanent deformations, while the adhesive layer has an inelastic behaviour. Results show that the lap joints present a rate-dependent behaviour in tensile tests and may present highly different cyclic responses which are quite sensitive to very small perturbations in the manufacturing process.

A rational finance explanation of the stock predictability puzzle

AbstractWe address the stock predictability puzzle, a challenge in the stock market often discussed in behavioral finance. Our approach formulates a statistical model within rational finance, avoiding reliance on behavioral finance assumptions, and integrates stock return predictability into the Black–Scholes option pricing framework. Empirical analysis focuses on the predictability of stock prices by option and spot traders, introducing a forward‐looking measure we term “implied excess predictability.” Results show that option traders' predictability of stock returns positively correlates with moneyness, whereas for spot traders, this relationship is inverse. These findings suggest a potential asymmetry in stock price predictability between spot and option traders. Additionally, we demonstrate the importance of incorporating stock return predictability into option pricing formulas, particularly for options with strike prices significantly different from the stock price. Conversely, when moneyness is close to unity, predictability is not integrated into option pricing, indicating equal information among spot and option traders. Comparison of volatility measures reveals the difference between implied and realized variances or variance risk premia as potential predictors of stock returns.

Does The Productivity of Companies Affected by Employee Stock Option Plans and Intellectual Capital?

Purposes: This study tries to identify the impact of intellectual capital and employee stock option plans on company productivity. Productivity is measured with The Malmquist Productivity Index which is intended to measure the efficiency of companies. Measurement of intellectual capital using Value Added Intellectual Capital determined by human capital efficiency, structural capital efficiency and capital employed efficiency. Methods: This research uses a quantitative approach, and data collection is carried out through secondary data. The research sample was taken from 60 companies with 180 observation data from the financial industry sector listed on the Indonesia Stock Exchange from 2019 to 2021, during the Covid-19 pandemic. The multiple regression analysis method is used to examine the relationship between intellectual capital, employee stock option plans, and company productivity. Findings: The results imply that human capital, structural capital, capital employ and employee stock option plans have impact on company productivity. Therefore, a dominant factor affecting company productivity is human resources. The implementation of share ownership schemes for employees has not been widely used in businesses that operate in the Indonesian financial industry sector. Novelty: The advantage of the Malmquist Productivity Index on the financial industry when compared to others is that it does not require assumptions of corporate behavior as applied in the Data Envelopment Analysis methods such as minimizing costs or maximizing profits. The Malmquist Productivity Index can specifically assess the productivity of each company unit. This research became very interesting because the productivity measured by the Malmquist Index in the finance industry was influenced by structural capital and human capital.

Mark Ups and Pass-Through in Small and Medium Retailers for Rice, Tomato Sauce and Oil

Abstract In this paper, we recover and decompose markups, and estimate the pass-through rates from cost to prices in small and medium retail stores for oil, tomato sauce, and rice in Uruguay using a structural model of demand and assumptions about the competitive behavior of producers. The market power for these products has been under study by the Commission of Promotion and Defense of Competition since 2016, and the proposed methodology allows for a deeper exploration of the measurement and understanding of the origin of that market power. In addition to providing a fundamental input for competition defense policies in Uruguay, this study enhances the international academic literature by contributing evidence on cost-to-price pass-through in a developing economy with potentially greater market power than that found in developed countries. About 65 % of the market power under the Nash Bertrand assumption is explained by the ability of firms to differentiate products and 35 % by the ownership structure in the case of oil and sauce. In the case of rice, 49 % is explained by differentiation and 51 % for ownership structure. Finally, the pass-through rates are low for the three products, being under both behavioral assumptions lower than 55 % for the three products.

Verifiable Crowd Computing: Coping with bounded rationality

In this paper we use the repeated-games framework to design and analyze a master-worker (MW) mechanism, where a master repeatedly outsources computational tasks to workers in exchange for payment. Previous work on MW models assumes that all workers are perfectly rational and aim to maximize their expected utility. Perfect rationality is a strong behavioral assumption because it requires that all workers follow the prescribed equilibrium. Such a model may be unrealistic in a practical setting, where some agents are not perfectly rational and may deviate from the equilibrium for short-term gains. Since the correctness of these MW protocols relies on workers following the equilibrium strategies, they are not robust against such deviations.We augment the game-theoretical MW model with the presence of such bounded-rational players or deviators. In particular, we show how to design a repeated-games based MW Verifiable Crowd Computing mechanism that incentivizes the rational workers (or followers) to effectively punish such deviators through the use of terminal payments. We show that the master can use terminal payments to obtain correct answers to computational problems even in this more general model. We supplement our theoretical results with simulations that show that our mechanism outperforms related approaches.

Standard PSInSAR approach: Experimental study on the sensitivity of different bounds change on the deformation

Abstract. An experimental study conducted on standard PSInSAR technique to check the sensitivity of different bounds on the deformation results. This study is motivated by the results obtained from employment of different parameter ranges, with the assumption of the linear behavior of the deformation. despite implementation of slight parameter change shows similarity in most of the PS points. However, significant PS points display slightly different deformation measurements and trends. This change in the PS points motivated an experimental study to evaluate, analyze and assess the results from each different bounds through searching the solution space to find the best fitting to the estimated model, besides assessing of the temporal coherence estimator as quality and fitting indicator. A high-resolution TerraSAR-X (TSX) dataset is used to estimate the deformation using linear model and check the behavior over time. These dataset cover Wuhan city as a case study within two years to avoid non-linearity in the deformation. The main part of this experiment is the descriptive of the statistics across all trials of different bounds. Then, assessing the measurement results of the trials, and the coherence estimator that used as a quality indicator to assess the quality of the PS points in comparison with the standard deviation. The results of the measurements indicate that while the coherence estimator select the PS points based on their stability and fitting to estimated model but does not provide a big difference as function of different bounds through searching the solution space. The results are confirmed with the available global Positioning system (GPS) station in our study area and displays similar trends and patterns over all the trials with slight differences with the different parameters range. The statistical analysis and assessment reveals differences in the velocity results and erroneous during changing the parameters range.

Asynchronicities of growth: a process extension to the Uppsala model of internationalisation

We contend that the Uppsala internationalisation process (IP) Model offers the basis, yet unrealised, for a process theory of growth of the internationalising firm. From the Model’s origins, particularly in Penrosean theory, we develop this potential by offering a theory extension that explicates the organisational changes within the firm required to sustain international growth. This repositioning distinguishes us from previous attempts to amend, supplant or extend the IP Model. In developing the theory extension, we specify how we remain faithful to the IP Model’s behavioural assumption ground. We provide a model of the internationalising firm that posits non-linear growth paths. This is due to the challenges of synchronising the external opportunity seeking of the firm as it expands internationally with the internal capacity building required to realise these opportunities. Introducing to the IB field this asynchronicity problem, an absence of temporal concurrence, we show its potential in explaining organisational changes and discontinuities in the internationalising firm’s development as it seeks to grow. By extending the IP Model to offer a theory of growth of the internationalising firm, we provide the basis for further process scholarship on this topic that addresses contemporary concerns and developments.

Forecasting the Mexican craft beer market: an integrated consumer perception conjoint analysis approach incorporating price and product attributes

PurposeThis paper aims to uncover patterns of Mexican craft beer consumers and guide companies’ decisions in the creation of new products, marketing strategies, advertising and promotion to increase craft beer sales and contribute to faster growth.Design/methodology/approachThis is a conjoint analysis with a selection of attributes for new or renewed products, marginal disposition to pay for particular characteristics through brand-specific choice-based design, and market simulation.FindingsThis paper clearly demonstrates consumers’ preferences and willingness to pay in Mexico, with a cutting-edge market research technique combining the prioritization of preferred craft beer characteristics, and the price consumers are willing to pay for such product characteristics.Research limitations/implicationsThe study's sample size of 501 responses is relatively small compared to the total number of craft beer consumers in Mexico. To enhance the validity and reliability of the findings, future studies should aim to obtain larger samples and compare their results with those of this study.Practical implicationsThis study has important implications for craft beer producers, allowing them to develop targeted craft beers with appealing attributes for Mexican consumers, such as color, aroma intensity, alcohol degree intensity, bitterness, foam level and price.Social implicationsThis study's market forecasting simulation technique is based on assumptions of consumer behavior and market dynamics. Although relevant variables were considered, unanticipated external factors or market changes could impact the forecasts' accuracy. This will allow for a more comprehensive understanding of craft beer consumer preferences in different markets and enhance the reliability of forecasting techniques.Originality/valueThis paper informs craft beer producers by providing valuable knowledge on customers’ preferences and willingness to pay to enhance craft beer companies’ product development processes.

Trusting by Numbers: An Analysis of a Chinese Social Credit System Governance Infrastructure

To govern, states collect and evaluate information about citizens. This paper examines a social credit system (SCS) in China, a state initiative aimed at governing trust through the quantification of social behavior. Our analysis opens the ‘black box’ of an SCS metric, investigating how trust is translated into numbers and the implications of this translation. We reveal that the SCS is deeply relational and embedded in specific interests, biases, and logics of governance. The system has the potential to reinforce structural injustices and inequalities as it particularly disadvantages rural residents. Meanwhile, it subjects government employees to stricter surveillance, indicating its multifaceted objectives. Our finding uncovers the nuanced ways the system interacts with social stratification in Chinese society and the administrative structure inside the state. We problematize the individualistic, decontextualized, and behavioral assumptions undergirding the metric, and advocate for a critical reassessment of the sociopolitical dimensions of such quantitative governance infrastructures.

Travel behaviour and the 15-min City: Access intensity, sufficiency, and non-work car use in Toronto

One of the key travel behavioural assumptions in the 15-min City concept is that if daily necessities are nearby, residents would be encouraged to use slower but more sustainable modes, such as walking, cycling and public transit to reach these destinations, thereby reducing car dependence. This research explores non-work car use associated with the 15-min City concept in the City of Toronto, Canada. We first calculate transportation accessibility, or what we refer to as access intensity, to five categories of daily necessities (food, commercial, health, recreation, and education establishments) using walking, cycling, public transit, and driving. Next, these results are analyzed using a set of minimum access criteria to particular amenities within the different destination types to determine a set of binary access or sufficiency scores. Spatial patterns of accessibilities by mode show expected pockets of high and low access. However, further analysis of non-work trip rates using travel survey data suggests that increases in 15-min accessibilities by walking, cycling, and transit are associated with decreases in the use of driving for 15-min trips. In particular, driving rates decrease as sufficient walking, cycling, and transit access improves with the largest decrease associated with sufficient walking access to all five categories of necessities. This work offers important implications for sustainable transportation and land use planning as it appears that residents do use alternative and more sustainable modes when they are associated with sufficient accessibility to all categories of destinations.

BEHAVIOURAL FINANCE: A BIBLIOMETRIC ANALYSIS USING SCOPUS DATABASE

A branch of behavioural economics in finance known as "behavioural finance" integrates sociological and psychological principles into its paradigms. Behavioural finance assumptions are often created when rational models fall short of explaining investor behaviour or market aberrations. The number of publications in this area has recently increased, indicating its increasing importance. The main objective of this article is to examine the state of behavioural finance studies at the moment. The article is conceptual and provides future directions. This is based on the bibliometric analysis methodology. A sample of 110 papers from the field of behavioural finance were subjected to bibliometric analysis through a systematic search technique on the Scopus database for the years 2002 until 2022. For the research, the R-based web application Biblioshiny from the Bibliometrix package was utilised. Using the software's automated workflow, significant authors, articles, journals, countries, and themes were located, and social network analysis, citation, and co-citation were also performed. The research discussed here exhibits not just the conceptual structure of the field but also its intellectual and social structure. This study offers crucial information on topics that require more research. Researchers in the future would benefit from a thorough assessment of the literature in order to create a solid conceptual framework. Since it offers a wider range of top-notch journals in organised ways that integrate with the Bibliometrics programme.

Social reproduction against administrative bordering: Struggles to reproduce legal legibility among temporary student-migrants in Finland

Abstract Migrants in a temporary legal status are subject to heterogeneous techniques of bordering accompanied by assumptions of migratory intention and behaviour. This article analyses migrants’ struggles around administrative bordering among non-EU/EEA migrants who hold one-year student residence permits in Finland. I focus on the ongoing labour of reproducing a ‘legally legible self’ as a perspective for approaching the subjective encounters with the border regime. Rather than merely analysing the impacts of the residence permit on social life, the article centres on the efforts of student permit holders to maintain the right to a continued legally regularized stay in Finland, addressed through a social reproduction lens. The argument is that viewing migrants’ efforts of reproducing a legally legible self through the perspective of social reproduction, and thus analysing the labour of attention and care that goes into reproducing one’s legal status, we can acquire a more nuanced understanding of the everyday struggles around administrative bordering. The article contributes first to the theorization of social reproduction beyond the walls of the home, by demonstrating how bordering processes intimately shape migrants’ opportunities for reproducing their lives, and secondly, by emphasizing life-making as a battlefield, the article adds to the research on administrative border struggles.

Long-term issues with the Energy-Only Market design in the context of deep decarbonization

There has been fierce controversy in the literature over the long-run efficiency of the energy-only market (EOM) design ever since its inception. In this paper, we provide novel insights to illuminate this historical controversy, and we revisit it with a focus on contemporary issues and the profound changes brought about by the energy transition. Specifically, we develop an analytical and modeling framework to quantitatively investigate how EOM outcomes hinge on the underlying behavioral, informational and structural assumptions. We apply our framework to a case study calibrated on Californian fundamentals that captures the key features of energy systems under deep decarbonization. We characterize how EOM outcomes can substantially deviate from the long-run optimum as soon as one assumption is relaxed compared to theoretical requirements. This leads to pathways with higher electricity prices, lower security of supply and delayed decarbonization. In particular, we highlight how market price signals alone are prone to a dynamic entry-exit coordination problem between investment in low-carbon assets and the phaseout of fossil-fired assets. This calls for a market design reform to complement price signals that accounts for realistic assumptions.

On the ideal gas law for crowds with high pressure

Active particle systems, such as human crowds, are out of equilibrium posing a significant challenge in identifying a suitable equation of state. However, several previous observations suggest that a crowd’s speed distribution may conform to a two-dimensional Maxwell–Boltzmann distribution under certain yet-to-be-determined conditions. Our research uncovers that the divergence between the fluctuation velocity magnitude’s probability density function and its best 2D Maxwell–Boltzmann fit diminishes in a power-law fashion with decreasing collision time scale between individuals. These findings are robustly supported by both experimental data and simulations with diverse boundary conditions and force potentials. The equilibrium characteristics of crowds are interpreted through a canonical ensemble framework. Furthermore, we show that high pressure indicates equilibrium characteristics in human crowds. Remarkably, we reveal the ideal gas law for human crowds without resorting to any behavior assumption. We demonstrate the predictive capability of the ideal gas law on both observational and modeling data. Our research highlights a new pathway to explore and validate traditional thermodynamic quantities and laws in the setting of high-pressure human crowds, advancing our understanding of active matter systems.