Influence Of Risk Attitudes Research Articles

Risk attitudes and demand for insurance: micro evidence from Ghana

PurposeThe purpose of this study is to understand how risk attitudes drive demand for different types of insurance amongst Ghanaians.Design/methodology/approachThis study uses data from a nationally representative survey of Ghanaian households (Ghana Living Standards Survey Round 7). Risk aversion is measured following the approach of Holt and Laury (2002) in the use of hypothetical questions about investment. Probit regressions are used to estimate the effect of risk aversion on insurance outcomes.FindingsThe paper finds evidence that supports the theory that risk attitudes influence insurance demand. Specifically, risk aversion is positively related to the uptake of insurance in general and in particular, public health insurance. Unlike previous literature, the authors do not find the sex of the respondent to affect the relationship between risk aversion and insurance demand except for private health insurance. Socio-economic factors such as wealth, age and education were found to strongly predict insurance demand.Research limitations/implicationsThe findings confirm that risk attitude influence the demand for insurance in developing countries but socio-economic factors play a strong role in explaining low insurance penetration in such contexts.Originality/valueTheoretically, attitudes towards risk have been strongly linked with insurance demand. Yet, empirical evidence on this relationship is limited in developing countries where insurance penetration is very low. This study is among the first to document the influence of risk attitude on the demand of a range of insurance products using a large nationally representative sample of individuals in a developing country.

RISK ATTITUDES, MENTAL ACCOUNTING AND OVERCONFIDENCE IN INVESTMENT PLACEMENT DECISION DURING AND POST COVID-19

The Small and Medium Enterprises is the main pillar the people's economy. SME investment decisions related to how entrepreneurs place their funds is a very determining factor in company performance. The purpose of this study is to analyze and explain: 1) The influence of risk attitudes on company performance through decisions on the placement of working capital funds for small and medium enterprises (SMEs), 2) The effect of risk attitudes on company performance in SMEs 3) the effect of working capital fund placement decisions on the performance of SMEs. The study population was all garment, weaving, carving and batik SMEs in Jepara. 
 The sampling technique is non-probability sampling, using assessment sampling. This study found that overconfidence behavior and risk attitude have a significant influence on investment decision making. Mental accounting doesn’t have a significant influence on investment decision making. The more investors are willing to face risks and the higher the overconfidence will increase investment decisions. The number of investors who are risk seekers in the capital market is a natural thing because stock investment is included in the high-risk investment category. Mental accounting can not influence the investment decision making.

The influence of risk attitude on credit risk contagion—Perspective of information dissemination

The information related to enterprises’ credit level will disseminate among entrepreneurs through their relationships. Entrepreneurs with different risk attitudes may make different decisions even if they face the same information, which will affect the credit risk contagion among enterprises. This paper constructs a dual-layer network to describe relationships among entrepreneurs and enterprises, and builds a credit risk contagion model with the influence of information dissemination, then investigates the influence factors on the credit risk contagion by simulation analysis. The results are as follows: (1) The threshold of credit risk contagion is negatively correlated with the possibility of losing immunity and positively correlated with the possibility of recovery; (2) The number of infected enterprises decrease with the increasing of the social rate and dual-layer network similarity; (3) Strengthening information dissemination among entrepreneurs can control credit risk contagion among enterprises.

A generalized mean-variance metric of route choice model under travel time uncertainty

Route choice modeling under travel time uncertainty is essential for analyzing travelers’ mobility patterns. This paper investigates the impact of travel time uncertainty on route choice behavior in user equilibrium models based on a generalized mean-variance metric (GMV). This model can capture the influence of risk attitudes and schedule unpunctuality on route choice using a generalization of expected travel time, variance, and expected early or late arrival penalties, of which travelers are assumed to minimize the GMV of trips considering a certain on-time arrival probability. This paper establishes the properties of GMV and formulates the GMV-based static user equilibria as a variational inequality (VI) problem, for which the existence and uniqueness of the solutions are also analyzed. An effective traffic assignment algorithm without path enumeration is developed to solve the proposed user equilibrium problem. Numerical examples are conducted to demonstrate the properties of the proposed model.

The Influence of Risk Attitude towards the Entrepreneurial Intention

Currently, Indonesia has a goal to increase the number of entrepreneurs for about 20,000 new enterprises in 2019. This number is increasing every year, which indicate the urgency of the government to emerge entrepreneurs within the society (Kompas, 2018). Many factors can form an entrepreneur. They can be encouraged from family background, hobbies, needs, and also through an educational system. A different method of teaching and treatment will drive different entrepreneurial results. Several studies show that entrepreneurs behave differently. Entrepreneurs create and manage their business to achieve their business goals. It makes the entrepreneur is having the willingness to give resource on it, such as pays the material used in the business, rent a place, and higher employee. It also makes them have more willingness to take the risk along the entrepreneurial activity (Paun, 2013). Therefore, the researcher wants to discover the relationship between entrepreneurial intention and risk attitude. This research uses a quantitative approach in order to explore the study and use a questionnaire as the tools. The result was analyzed using the single linear regression method with SPSS software. Single linear regression is a statistical method used to explain the relationship between dependent and independent variables. The independent variables in this research would be Risk Attitude, and the independent variable would be Entrepreneurial Intention. From that, the research hypotheses would be entrepreneurs risk attitude significantly affected entrepreneurial intention; the higher risk attitude of a person will increase their entrepreneurial intention.
 Keywords: risk attitude, entrepreneurial intention, entrepreneurs

The influence of risk attitudes on suppression spending and on wildland fire program budgeting

Research has suggested that excessive risk aversion is a key driver of rising federal suppression costs. To formally understand how alternative risk attitudes of contracted incident managers can affect a public fire management organization's demand for fire management effort, a two-stage sequential game with complete information is presented. Qualitative expressions of the relevant comparative statics are derived and Monte Carlo simulations are constructed from the parameterized game to quantify these relationships. The simulation exercise reveals that risk aversion and a low tolerance for downside risk can have the similar effect of increasing the relative share of agency expenditures devoted to wildfire suppression. This theoretical analysis exposes the potential for multiple types of risk attitudes to influence an incident commander's demand for suppression effort. Consequently, these determinants of suppression demand also influence the organization's overall allocation of fire management budgets, suppression's expenditure share, and the overall agency exposure to downside risk.

How Risk Attitudes Affect the Implementation of Good Agricultural Practices in Sugarcane Farming

Indonesian Ministry of Agriculture issued Minister of Agriculture Regulations Number 53 in 2015 about Good Agricultural Practices for Sugarcane as an effort to increase production and productivity of sugarcane. The implementation of GAP on various commodities was differ since risk across commodities and risk attitude among farmers are varied. Hence, this study aims to analyze (1) the implementation level of Sugarcane GAP among farmers of the Wonolangan Sugar factory and (2) the influence of risk attitudes toward GAP implementation. The study was conducted on 102 randomly-selected farmers in Lumajang and Probolinggo Regency. The level of GAP implementation is measured by Likert scale with nine indicators of Sugarcane GAP. The level of GAP implementation is categorized into low, medium, and high based on the total score of GAP implementation obtained from each farmer. One-sample t-test is used to test the implementation level of GAP. Risk attitudes are measured with a Likert scale, as refers to Pennings and Garcia method. The influence of risk attitudes towards GAP implementation is analyzed using OLS regression. The result of t-test shows that the level of GAP implementation among sugarcane farmers is medium and high, and most farmers are risk-averse. Of the nine components used as indicators, seed preparation and labor welfare are in the medium category. Based on the OLS regression, risk-taker farmers have a lower GAP implementation than that of risk-averse farmers. Farmers' lack of knowledge about GAP guidelines, can be supported by the presence of socialization activities by sugar factories, extension workers, and related institutions.

ATTITUDES TOWARD RISK AND SOCIOECONOMIC FACTORS RELATED TO EDUCATIONAL LOANS

We explore the relationship between willingness to take financial risk and the probability of taking out a loan for educational purposes as well as the influence of risk attitudes on the size of the loan using data drawn from the U.S. Survey of Consumer Finances. The findings suggest a positive relationship between individuals' willingness to take financial risk and the probability of taking out a loan for educational purposes. Similarly, individuals' willingness to take financial risk appears to have an important relationship with the size of the educational loan. The findings suggest that non-white individuals and females are less likely to finance education through loans which could potentially increase inequalities in education and income if such individuals are deterred from investing in human capital. (JEL I22, I23)

RISK AND HEDGING BEHAVIOR: THE ROLE AND DETERMINANTS OF LATENT HETEROGENEITY

AbstractThe notion of heterogeneous behavior is well grounded in economic theory. Recently it has been shown in a hedging context that the influence of risk attitudes and risk perceptions varies for different segments using a generalized mixture regression model. Here, using recently developed individual risk attitude measurement techniques and experimental and accounting data from investors with differing decision environments, we examine the determinants of heterogeneity in hedging behavior in a concomitant mixture regression framework. Allowing for latent heterogeneity, we find that risk attitudes and risk perceptions do not influence behavior uniformly and that the heterogeneity is influenced by manager's focus on shareholder value and the firm's capital structure.

A class of risk-sensitive noncooperative games

Risk sensitivity is studied in connection to a class of noncooperative games with incomplete information. Specifically, we consider a two-player noncooperative stochastic game where each player maximizes the expected value of a utility function with constant absolute risk aversion. The approach generalizes more traditional models for economic policy evaluation, including the linear-quadratic stochastic Nash game studied by Papavassilopoulos (1981) and the exponential-quadratic function studied, in the context of single decision making, by Van der Ploeg (1984). Conditions for the existence of noncooperative equilibria are derived. The paper offers new insight on the influence of risk attitudes on equilibrium. It is shown, among other results, that in the assumption of Gaussian distribution of the random variables a Nash equilibrium may not exist when players risk attitudes are too conservative. The main results are illustrated with an example.