Investment Task Research Articles

Short-term conservation education influences Ugandan adolescents' knowledge, attitudes and investment decisions.

Environmental education research methods often focus on measuring changes in people's attitudes toward conservation. While attitudes are an important indicator of change, it is critical to target incentivised behaviour because conservation efforts often involve behavioural changes that are costly to one's self (e.g., reducing water use, purchasing pricier alternatives). In the present study, we measured both attitudes and behaviours in a short-term conservation education program near the primate-rich Kibale National Forest in Western Uganda. Adolescents ( N = 59) participated in a three-hour curriculum over three weeks integrated into an after-school wildlife club. After almost 30 years of successful primate conservation education in this region, we chose a novel taxonomic group (bats) for this study. Our pre-registered study had two conditions: an experimental condition, in which students learned about bats as an important local pollinator species, and a control condition, in which students learned about the moon. Only the experimental condition emphasised conservation's delayed benefits. We compared attitudes, knowledge, and behaviours pre- and post- curriculum. To capture behaviour, we employed an investment task in which participants could invest their own resources in a 'fund' to support work relating to bats or the moon, depending on condition. Across both conditions, participants showed positive shifts in attitudes and knowledge from pre- to post-measures and showed increased investments in bat- and moon-related funds. These findings reveal that short-term conservation education influences adolescents' investment decisions as well as their attitudes and knowledge. Our method can easily be edited for conservation education of any species including endangered primates.

Who gets duped? The impact of education on fraud detection in an investment task

Many financial scandals appear to depend on a lack of skepticism on the part of their victims. Sophisticated investors trusted Bernie Madoff, for example, despite early warning signs of implausible returns. Our study investigates how education explains fraud detection in financial decision-making. In a simple survey, economics and finance students are asked to make an investment recommendation from among four hypothetical funds, including one based on Madoff’s fund. We use Truth Default Theory to explain our results. We show that education increases the likelihood that students are suspicious of Madoff’s fund, and that for students whose suspicions are aroused, education makes them less likely to choose the Madoff fund.

ФОРМУВАННЯ ІНВЕСТИЦІЙНОЇ СТРАТЕГІЇ В ПРОЦЕСІ ЕКОНОМІЧНОГО РОЗВИТКУ ПІДПРИЄМСТВА

The article thoroughly analyzes the processes that contribute to the definition and implementation of investment strategies in the context of dynamic company development. The article presents the main methodological approaches to forming an investment strategy, as well as the relationship of this process with the life cycles of enterprises. Significant attention is paid to the integration of the investment strategy with the company’s general strategic planning, considering the economic, political, and social challenges of modernity. The article defines an investment strategy as a system of complex actions aimed at the effective use of resources to achieve the strategic goals of the enterprise. It explores the essence of the investment strategy through the prism of its impact on sustainable growth and development of the enterprise. An analysis of various investment resources is also presented, including material assets, financial investments, intellectual investments, and personnel development. Particular attention is given to the hierarchical structure of the investment policy and its elements according to the period of implementation. The authors identify key principles for forming investment strategies, considering the dynamics of changes in the macroeconomic environment and the need to adapt to rapidly changing business conditions. The article includes research on the relationship between the investment strategy and the general strategy of enterprise development, which allows for adaptation to changes in the external environment and optimization of decisions in the context of different stages of the enterprise’s life cycle. Particularly important is the analysis of strategic and tactical tasks that enable the enterprise to achieve long-term competitive advantages. The article also presents a graphical model that demonstrates the sequence of forming and implementing the investment strategy, starting from defining strategic directions to specifying investment tasks. The conclusions offer recommendations for improving investment management processes that can enhance the overall effectiveness and stability of companies.

Governmental Local Investment Fund as a Financial Instrument to Support Urban Investment by the Example of Cities with District Status in the Lodz Voivodeship

The purpose of the article/hypothesis is to present the Government's Local Investment Fund as a financial tool to support municipalities and districts during the COVID-19 pandemic crisis and to provide an assessment of the support received in the context of investment expenditure incurred by cities with district rights in the Lodz Voivodeship.
 Methodology: On the basis of data from the Chancellery of the Prime Minister and the financial reports of the Cities with a District Status, the amount of funding granted from the Government Local Investment Fund was reviewed. Based on data from the Local Data Bank, the basic financial data for three Cities with a District Status from the Lodz Voivodeship in the years 2019–2021 was analysed, i.e. in the context of the use of funds from the Government Local Investment Fund.
 Results of the research: Local government units during the COVID-19 pandemic had an opportunity to obtain financial support from the state budget for the implementation of investment tasks from the Government Local Investment Fund. A total amount of PLN 13 billion was allocated to local governments. The funds were distributed in three rounds using two different qualification methods: algorithm and competition mode. Cities with a District Status under the competition procedure received less support than other local governments, and there were even situations in which they were deprived of this support. The distribution and the amount of support awarded caused a lot of controversy at the same time highlighting a need for changes in the system of local finances.

Willingness to take risks for sustainability during the COVID-19 pandemic

This paper empirically shows an increase in investor attention to sustainability during the COVID-19 pandemic using various measures of investor sentiment. To understand the drivers of increased interest in sustainability among investors, we use evidence from two experiments conducted before and during the pandemic. Results collected in an investment task reveal that the shift towards sustainable investments during the pandemic is primarily driven by risk-averse individuals and those with pessimistic risk expectations. These findings suggest that investors exhibit a “willingness to take risks” for sustainability during times of crises.

In God We Trust: Effects of spirituality and religion on economic decision making

BackgroundSpirituality and religion (S/R) are highly prevalent and relate to various aspects of mental health. However, S/R is multifaceted, and cognitive and behavioral mechanisms of S/R are unclear. Spiritual beliefs and attitudes, and regular practice of religious rituals, may facilitate general consistency of behavior and attenuate impulsive reactivity to loss and gains. MethodsWe utilized a sophisticated and complex economic decision-making paradigm – the Sequential Investment Task – to probe effects of S/R on behavioral adaptation to positive and negative outcomes (both real and fictive) within a diverse community-based sample (n = 242). S/R was assessed with a wide range of self-report measures. ResultsCollectively, facets of religion had significant effects on task variables, suggesting that religious involvement is associated with more consistency in decision making, and less behavioral change resulting from real gains and fictive losses, but not real losses. Conversely, spirituality was not significantly tied to behavior overall, though some facets (i.e., importance of spirituality and belief in God) predicted greater behavioral consistency. DiscussionThis study suggests that religion, but not spirituality, is associated with greater uniformity of behavioral responding, less reactivity to positive outcomes, and less reactivity to perceived losses, when making investment decisions.

The predictive power of risk elicitation tasks

This work reports the results of two online experiments with a general-population sample examining the performance of different tasks for the elicitation of risk attitudes. First, I compare the investment task of Gneezy and Potters (1997), the standard choice-list method of Holt and Laury (2002), and the multi-alternative procedure of Eckel and Grossman (2002) and evaluate their performance in terms of the number of correctly-predicted binary decisions in a set of out-of-sample lottery choices. There are limited differences between the tasks in this sense, and performance is modest. Second, I included three additional budget-choice tasks (selection of a lottery from a linear budget set) where optimal decisions should have been corner solutions, and find that a large majority of participants provided interior solutions instead, casting doubts on people’s understanding of tasks of this type. Finally, I investigate whether these two results depend on cognitive ability, numerical literacy, and education. While optimal choices in budget-choice tasks are related to numerical literacy and cognitive ability, the predictive performance of the risk-elicitation tasks is unaffected.

Optimization of business processes in investment using automation technology, financial calculations, and risk assessment methods

This work considers the optimization and development of business processes in investment. The conditions for the digitalization of the economy actualize the issue of introducing information technologies at all its levels and links. It is proved that information technology is an effective tool for reducing the time for the implementation of individual business processes and in investment. Its use expands the possibilities of exchanging information and its dissemination to the general public, improves the quality of investment tasks and the objectivity of investment decision-making results. Experimental studies have confirmed that the result of its application is the efficiency of obtaining, processing, and analyzing information when making management decisions. The visual content of the results of investment analysis, obtained using automation technologies, facilitates the perception of information, improves the quality of its transmission, and the value of ideas. The continuous development of information technologies in the field of investment is the basis for further scientific and practical research in this area. Based on such considerations, the feasibility of modifying the methodical toolkit of financial calculations in the process of analyzing the effectiveness of investment implementation is justified. Models of the modified internal rate of return on investment and the rate of return on financial management are proposed. Based on their definition, the objectivity of evaluating investments increases, the effectiveness of cash flow management during their implementation is proved. Strengthening the manifestation of crisis phenomena actualize the study of the nature of the occurrence of risks and the degree of their controllability. The approach to assessing investment risks using the β coefficient, the calculation technology, which is a universal tool for assessing the impact of systemic risks at the macro and micro levels, is substantiated.

Effects of Investment Experience on the Stock Investment Task: The Mediating Role of Risk Perception

Due to the limitations of traditional financial analysis and the non-specificity of laboratory-based gambling tasks, it is difficult for researchers to isolate the independent contributions of risk perception and initial investment experience on novice investors' behaviors. Thus, it is still necessary for researchers to describe the process by which investment experience affects the investment behavior of novice investors by employing the methods of psychological experiments that can control and eliminate these confounding variables in the laboratory. The current study created a stock investment task based on the balloon analogy risk task to simulate the stock market in the laboratory. Two hundred and twenty Chinese college students were recruited as participants. Chain intermediary model analysis showed that initial investment experience influences a novice investor's behavior through risk perception. In addition, risk perception displayed the characteristics of continuity, in which the initial risk perception would affect later risk perception. These results indicate that investment experience does influence investment behavior. Different early investment experiences have correspondingly significant effects on the novice investors' investment behavior through their risk perception. The results also suggest that novice investors can partly correct the effects of their initial investment experience through continuous feedback from the stock market.

Best Fit of Cumulative Cost Curves at the Planning and Performed Stages of Construction Projects

The correct planning of investment costs and the effective monitoring of implementation process are significant problems in the management of investment projects. At the stage of construction works, it is worth determining the trend of the performed cost curve and periodically testing the fitting to the scheduled course of the budgeted cost curve. The aim of this research was to determine the shape and course of the cost curves for selected construction projects. A procedure was developed to forecast the distribution of cumulative costs at the planning stage of construction projects using envelopes (spaces) and cost curves for three different types of buildings and construction sectors: collective residential buildings, hotel buildings, and commercial and service buildings. An assessment of the actual costs incurred of investment tasks was carried out, the trend of which the cumulative cash flow curves can be estimated with a large match by forecasting the construction process. The article determines the best fit curves and the spaces of cost curves (the banana envelope of the S-curve) using mathematical formulas (third-degree polynomials), along with developed graphs for various construction projects. The analysis of the author’s own research was used to determine the best-fit curve and the curve’s area, which indicates the area of the correct planning of cumulative costs of construction investments.

From Ranking Search Results to Managing Investment Portfolios: Exploring Rank-Based Approaches for Portfolio Stock Selection

The task of investing in financial markets to make profits and grow one’s wealth is not a straightforward task. Typically, financial domain experts, such as investment advisers and financial analysts, conduct extensive research on a target financial market to decide which stock symbols are worthy of investment. The research process used by those experts generally involves collecting a large volume of data (e.g., financial reports, announcements, news, etc.), performing several analytics tasks, and making inferences to reach investment decisions. The rapid increase in the volume of data generated for stock market companies makes performing thorough analytics tasks impractical given the limited time available. Fortunately, recent advancements in computational intelligence methods have been adopted in various sectors, providing opportunities to exploit such methods to address investment tasks efficiently and effectively. This paper aims to explore rank-based approaches, mainly machine-learning based, to address the task of selecting stock symbols to construct long-term investment portfolios. Relying on these approaches, we propose a feature set that contains various statistics indicating the performance of stock market companies that can be used to train several ranking models. For evaluation purposes, we selected four years of Saudi Stock Exchange data and applied our proposed framework to them in a simulated investment setting. Our results show that rank-based approaches have the potential to be adopted to construct investment portfolios, generating substantial returns and outperforming the gains produced by the Saudi Stock Market index for the tested period.

Do people care about loss probabilities?

In a series of experiments, we provide evidence that people pay special attention to the probability of losing. We first analyze this behavior in the typically used one-shot choice tasks. We then extend our analysis to repeated decisions in choice tasks, as well as allocation and investment tasks. Additionally, we test both decision making under risk and under gradually removed uncertainty, as with decisions from experience. Our findings of explicit attention to loss probabilities contradict the predictions of normative and descriptive decision theories, such as Expected Utility Theory and (Cumulative) Prospect Theory. We suggest a value function with a jump rather than a kink at the reference point, which separates gains and losses.

Impact of Multi-Stakeholder Dialogues in Agriculture: The Case of Sunflower Sector Development in Tanzania

Agriculture development have tended to disregard the efficacy of multi-stakeholder dialogues (MSDs) in bringing lasting change to the poor small-scale producers in developing countries. Though the proponents of MSDs promote the application of MSD methodology, handful examples exist of how it fosters business-enabling environment in the agriculture sector and benefit the smallholder farmers. Thus, this case study demonstrates the power of multi-stakeholder dialogues (MSDs) in coordinating ecosystem market actors’ increased industry voice in edible oil/seeds, with example from sunflower development in Tanzania. The case study is a flashback to SNV’s experience in influencing edible oils policy changes in the country through MSD methodology. The case study draws an example from SNV Netherlands Development Organisation’s experience in facilitating series of multi-stakeholder dialogues in sunflower sector development using a framework of Oilseeds Multi-stakeholders Forum (OMSF). From highly uncoordinated actors to alliance building, the case study attests the uniqueness of MSDs in reforming, tackling policy and market constraints in sunflower value chain in the country. The initiative resulted in the establishment and development of alliances- the Tanzania Edible Oilseeds Association (TEOSA), Tanzania Sunflower Processors Association (TASUPA), Sunflower Oilseeds Processors Alliances (CEZOSOPA and UMAMBE). TEOSA and TASUPA in collaboration with the sunflower oil processing alliances of CEZOSOPA and UMAMBE, succeeded in changing sunflower business environment in the country. After succeeding in claiming space in the Ministry of Industries, Trade and Investment task force, the alliances managed to influence, for the first time in sunflower history in Tanzania, the government to come up with a five years sunflower development strategy. Keywords: Sunflower, Value Chain, Accountability, Multi-stakeholders, Dialogue, Farmers, Market Actors, Alliances, DOI: 10.7176/JBAH/12-20-05 Publication date: October 31 st 2022

A neural basis of rational inattention models: consistency of cognitive cost with the mutual information criterion.

The rational inattention model has recently attracted much attention as a promising candidate to model bounded rationality in the research field of decision-making and game theory. However, in contrast to this energetic promotion of the theoretical works, empirical verification of the validity of the RI model has not progressed much. Furthermore, to our knowledge, the central assumption of the RI model, that the amount of mutual information obtained from signals adequately represents the cognitive cost of information, has not been tested from a neuroscientific perspective. The purpose of the present study was to test whether the amount of mutual information adequately represents the cognitive cost of information from a neuroscientific perspective. We proposed a sequential investment task, in which the two main models of RI can be treated simultaneously in a more realistic experimental environment. We used a model-fitting approach to analyze the subjective information cost, and compared the model parameters representing the information cost with the concentration of oxidized hemoglobin in the brain blood. Our results showed that the cost parameter λ of the stochastic choice type model, which fits the behavioral data of the present experiment better than the Kalman filter type model, was significantly positively correlated with the activation status of the rostral prefrontal cortex and dorsolateral prefrontal cortex. The cognitive cost represented by the amount of mutual information employed in the RI model is consistent with the activation of brain regions associated with cognitive cost, and, thus, indirectly supports the assumption of the RI model.

Background risk and risk-taking – evidence from the field

AbstractMost decisions involving risk are not taken in isolation. In addition to the risk from that decision, other independent, so-called ‘background’ risks, are considered. Our research adds to the growing evidence that this background risk influences risk-taking. We report results from a repeated lab-in-the-field investment task with Senegalese fishers in the presence of background risk related to their fishing income and their health. Our measure of background risk is the monthly wind condition. Without controls, we find that fishers act on average intemperately. Adding controls, we find that the impact of background risk on risk-taking—measured as the investment in the investment task—depends on the boat size of the fishers. When dividing the sample according to wealth, we find temperate behavior for the relatively poorer group and intemperate behavior that depends on boat lengths for the relatively richer group. Our results show the interrelations between background risk and context factors.

Determining Cost and Time Performance Indexes for Diversified Investment Tasks

The aim of the research results presented in the article was to develop a method that enables the analysis and evaluation of deviations at the stage of implementing a construction investment in various construction sectors. The new method was based on the well-known Earned Value Method (EVM). It was assumed that the monitoring of costs and the constant control of the implementation time of construction projects, with the simultaneous analysis of the level of deviations, allows for the consistent management of the investment task. Moreover, it ensures—in the required time—the adoption of appropriate improvement actions, and also enables the quantification of risk during the planning of an investment. The article attempts to prove the validity of the assumption about the necessity of the cyclical verification of the level of deviations in construction projects budget and schedule. Such an approach provides numerous perceptible benefits; such as the precise determination of the size of possible losses; an immediate reaction to risk; and the possibility of making changes at every stage of implementing an investment. On the basis of the analysis of the author’s own research carried out in three research groups of facilities (collective housing; hotels; and commercial and service facilities), an original attempt was made to determine the size of cost and time performance indexes of various investment tasks. The values of these performance indexes were determined, and are presented as quantile images in boxplots.

"Assessment of Spatial Differentiation of Financial Independence of Poviats in Poland (2007–2019)"

A poviat is an independent entity with autonomy in the use of resources in the process of carrying out public tasks. Its local economic, financial and social resources, as well as information resources, determine the level of development. The basis for the proper and effective operation of poviats is the provision of appropriate financial resources. They consist of both the so-called own income as well as transfers from the state budget in the form of, inter alia, general subsidies and targeted subsidies. The main aim of the article is to assess the spatial differentiation of the level of financial independence of poviats in Poland in 2007-2019 using a synthetic measure. The empirical data on poviats in Poland was collected through information available from the Local Data Bank of the Central Statistical Office. The financial independence of poviats is radically diversified. There are significant differences regarding its level between the east and west of Poland. The western part of the country is characterized by better independence and financial situation. The study showed that the level of financial independence was shaped primarily by own income, income from PIT (personal income tax) and CIT (corporate tax), transfers from the state budget, and investment expenditure. The development of poviats depends on financial independence. The possessed financial resources are the basis for the operation and the condition for the implementation of its current and investment tasks. The potential of the poviat is built, among others, by professional activity of inhabitants, local labor market, entrepreneurship, infrastructure, condition of the natural environment, financial situation, increase in the quality and scope of public services and investments. Financial independence is correlated with the level of local development. It translates into disproportions in terms of the possibilities of meeting

Cognitive Capacity Constraint and Attention Allocation in Human Decision Making

The Rational Inattention (RI) model has attracted attention in recent years as a promising candidate for modeling bounded rationality in the fields of decision making and game theory research. The model assumes that there is a cognitive cost (cost of information processing) that is proportional to the amount of mutual information obtained from signals, thereby making it possible to explain various phenomena observed in the market at a certain level. However, the RI model still lacks a sufficient cognitive foundation. In this study, we conducted an experiment to examine whether the cognitive costs and constraints on information processing, which are the assumptions of the Rational Inattention Model, are reasonable from the perspective of neuroeconomics using biometric data such as gaze information and brain responses. We adopted the sequential investment task with a view to applying it to finance. Our results showed that the stochastic choice rational inattention model fit the behavioral data of the present experiment, the larger the cognitive cost the more activated the brain regions involved in costly cognition, And the consistency between gaze information and the capacity constraint of the Kalman filter type model, as expected, when there is a lot of information, not all information can be processed, so more accurate decisions cannot be made.

Sunk costs under stress: Acute stress reduces the impact of past expenses on risky decisions

Rational choice should be guided solely by the prospects of available options. However, our decisions are often influenced by irrecoverable past costs, even when the current course of action turns out to be unfavorable, reflecting a cognitive bias known as the “sunk-cost effect”. In everyday life, many decisions are made under stress or elicit stress themselves. Whether and how stress impacts the sunk-cost effect, however, is not known. Based on evidence suggesting that the sunk-cost effect critically depends on the dorsolateral prefrontal cortex, which in turn is highly sensitive to stress, we hypothesized that stress may reduce the influence of past expenses on current decisions. Participants underwent a psychosocial stress manipulation or control procedure, before we assessed their sunk-cost tendency in a monetary investment task. Overall, participants showed a pronounced sunk-cost effect, particularly for options with low expected value. Acute stress reduced this tendency to invest in risky options with low probability of success following high prior investments. Moreover, the strength of this reduction of the sunk-cost effect was predicted by individual cortisol reactivity. These findings show that acute stress may reduce the impact of past expenses on current choice and that this effect may be mediated by glucocorticoid action.

PORTFOLIO MANAGEMENT OF ENERGY SAVING PROJECTS BASED ON THE MARKOVITS THEORY

The goal of the work was to identify research and compare methods of portfolio management of energy saving projects and to develop software for optimizing portfolio investments using several methods. The key elements and strategies of creating an effective investment portfolio are considered: diversification, rebalancing, active portfolio management, passive portfolio management.
 Given the basic principles of investment theory, the task of portfolio investment is to form an investment portfolio with known shares of certain assets to maximize returns and minimize risk. To solve this problem, the method of Harry Markowitz, known as modern portfolio theory, was chosen. This is the theory of financial investment, in which statistical methods are used to make the most profitable risk distribution of the securities portfolio and income valuation, its components are asset valuation, investment decisions, portfolio optimization, evaluation of results. From a mathematical point of view, the problem of forming an optimal portfolio is the problem of optimizing a quadratic function (finding the minimum) with linear constraints on the arguments of the function.
 Methods of optimization of portfolios of energy saving projects taking into account the specifics of the subject area are analyzed. According to the results of the analysis, the methods of finding the maximum Sharpe’s ratio and the minimum volatility from randomly generated portfolios were chosen.
 A software application has been developed that allows you to download data, generate random portfolios and optimize them with selected methods. A graphical display of portfolio optimization results has also been implemented. The program was tested on data on shares of energy saving companies. The graphs built by the program allow the operator to better assess the created portfolio of the energy saving project.