Irrational Decisions Research Articles

Menyelami Etika Konsumsi: Berbelanja Kebutuhan Harian pada Individu yang Mengadopsi Gaya Hidup Berkelanjutan

The problem of excessive consumption and consumer egoism is pervasive in many markets. This phenomenon not only has a negative impact on the environment, but also causes social problems and the economic integrity of society. The culture of consumerism and technology influences consumption behavior, encouraging excessive purchasing and irrational consumption decisions. This research discusses consumption actions carried out by informants which are based on reducing waste and supporting local products. The method used in this research was interviews with 4 informants in Yogyakarta who live a sustainable lifestyle. The aim of this research is to provide a more specific understanding that consumption is not just an economic act, but is a complex social and cultural phenomenon that can provide a deeper picture of humans and their environment. This research aims to understand how consumers consume goods and services to create a positive impact on the environment and economy. By examining the role of technology in driving consumption, it is possible to identify areas where consumers can improve their needs and satisfaction. The research results showed that ethical consumption behavior was carried out by the informants unconsciously. This article highlights the role of individuals in influencing consumption habits and encouraging change towards more responsible consumption.

The Effects of FOMO on Investment Behavior in the Stock Market

This study explores the impact of Fear of Missing Out (FOMO) on stock market investment behavior, focusing on how psychological and emotional factors influence investors' decision-making processes. The primary objective of the research is to investigate the relationship between FOMO and key behavioral trends, such as overtrading, speculative investing, and the formation of asset bubbles. A qualitative research approach was employed, utilizing a literature review of existing studies on behavioral finance, FOMO, and stock market dynamics. The findings indicate that FOMO significantly affects investors by amplifying emotional reactions to market trends, leading to irrational decisions that prioritize short-term gains over long-term financial stability. Social media and technology play a critical role in amplifying FOMO, creating herd behavior that contributes to market volatility and speculative bubbles, as seen in phenomena like "meme stocks." The study also reveals that younger investors are more susceptible to FOMO, largely due to their reliance on social media for investment advice. The results suggest that enhancing financial literacy and promoting disciplined, long-term investment strategies are essential for mitigating the negative effects of FOMO. Regulatory interventions targeting misinformation on digital platforms may also help reduce the prevalence of FOMO-driven investment behavior. Future research should further investigate the psychological mechanisms behind FOMO and explore the long-term sustainability of FOMO-driven market practices.

Measuring Impact of Market Sentiment on Stock Prices

This study considers the impact of investor sentiment on stock market prices, it is when something beyond traditional economic factors, such as emotions or perceptions that play dominating role in driving psychological and real pricing. This behaviour in investor sentiment often leads to irrational decision making, always influenced by news, social media and the movements of markets. This will make stocks price more volatile. Through sentiment analysis, historical stock data and behavioural finance models the study examines times when there were significant movements in the market. These trends suggest that happy days can cause major prices to rise (along with the sun) and bad news can punch holes in a report even if business hasn't really looked any worse. The regulators and the investors should understand that sentiment can improve the efficiency of the stock price-prediction algorithms as well as bring anomalies to light in the market. The study of market sentiment and its effect on the stock price. In the given paper of research, it is easy to notice the impact of interaction between investor sentiment and stock price.

Формализованные схемы механизма управления организационной системой, реализующей циклы производства как совокупность разнородных бизнес-процессов

The article is devoted to the development of a mechanism for the efficient use of available resources of the organiza-tional system (OS) of a manufacturing enterprise with a cascade model of the production life cycle, in the context of the need to promptly increase the volume of manufactured products and reduce the time of delivery of products to the customer. Object of study: mechanism of resource management of the OS. Subject of study: formal aspects of this mechanism that help reduce the risk of making irrational heuristic decisions. Purpose of study: development of a for-mal-ized description of an effective mechanism of resource management of the OS. Methods: resource and process approach to management, project management and analogy method, methods and means of schematic modeling of electronic means. Main results and their significance: for individual business processes and the entire production cycle, based on the introduced components, formalized diagrams of the mechanism of optimal resource management of the OS were constructed, which made it possible, based on their application, to increase the efficiency of using the availa-ble re-sources of the enterprise and increase the output (rate of production) of its final products. Limitations of the de-veloped approach are shown.

Effect of Acute Alcohol Consumption in a Novel Rodent Model of Decision Making.

Alcohol use, especially at high consumption levels, can lead to irrational decision-making. In humans, this can lead to harmful outcomes often seen in the context of driving under the influence and or aggressive behavior. To date, the field is lacking comprehensive animal models to examine the impact of alcohol use on decision making in rodents, particularly to examine sex differences in choice behavior. To address this issue, the present study examined the effects of acute alcohol consumption during a behavioral approach-avoidance task that captures momentary changes in decision-making behavior and choice selection in female and male rats. Our team has developed a novel behavioral protocol involving a concurrent choice to consume four different concentrations of alcohol and sucrose combinations. During the task, female or male rats can approach or avoid drinking solutions in four distinct corners of our test apparatus. The solutions were prepared in inverse concentrations (higher sucrose was paired with lower alcohol and vice versa) so that the rodents pursue minimal alcohol use by consuming the higher sucrose concentrations or higher concentrations of alcohol by drinking the lower sucrose concentrations. The animals also have the option to avoid drinking alcohol by not approaching any of the drinking cups. Behavior and choice were tracked during task performance involving different solution concentrations of alcohol and sucrose. The choice of consuming different concentrations of alcohol or sucrose resulted in sex-dependent differences in an approach-avoid trade-off pattern of behavior that was sensitive to different concentrations of alcohol/sucrose combinations. Notably, males were greatly affected by the introduction of alcohol into the task environment, approaching higher alcohol concentrations significantly more often than the non-alcohol containing options. In contrast, females choice patterns and task performance were largely unchanged during alcohol and non-alcohol containing tasks. Regardless of sex, we identify a novel method for identifying individual subject decision-making abnormalities during and after alcohol consumption. This research reveals a novel approach for examining the effects of acute alcohol exposure during a trade-off task, with decision patterns being more impacted by alcohol use in males as compared to females. We also offer the field a novel approach for identifying individual abnormalities in decision making behavior with the presentation of alcohol. Future research can explore these abnormal patterns in both acute and chronic alcohol conditions to develop methods for identifying subjects at-risk for developing an alcohol use disorder and the deleterious impact of alcohol on rational decision making.

Distractor effects in decision making are related to the individual's style of integrating choice attributes.

Humans make irrational decisions in the presence of irrelevant distractor options. There is little consensus on whether decision making is facilitated or impaired by the presence of a highly rewarding distractor, or whether the distractor effect operates at the level of options' component attributes rather than at the level of their overall value. To reconcile different claims, we argue that it is important to consider the diversity of people's styles of decision making and whether choice attributes are combined in an additive or multiplicative way. Employing a multi-laboratory dataset investigating the same experimental paradigm, we demonstrated that people used a mix of both approaches and the extent to which approach was used varied across individuals. Critically, we identified that this variability was correlated with the distractor effect during decision making. Individuals who tended to use a multiplicative approach to compute value, showed a positive distractor effect. In contrast, a negative distractor effect (divisive normalisation) was prominent in individuals tending towards an additive approach. Findings suggest that the distractor effect is related to how value is constructed, which in turn may be influenced by task and subject specificities. This concurs with recent behavioural and neuroscience findings that multiple distractor effects co-exist.

Distractor effects in decision making are related to the individual’s style of integrating choice attributes

Humans make irrational decisions in the presence of irrelevant distractor options. There is little consensus on whether decision making is facilitated or impaired by the presence of a highly rewarding distractor, or whether the distractor effect operates at the level of options’ component attributes rather than at the level of their overall value. To reconcile different claims, we argue that it is important to consider the diversity of people’s styles of decision making and whether choice attributes are combined in an additive or multiplicative way. Employing a multi-laboratory dataset investigating the same experimental paradigm, we demonstrated that people used a mix of both approaches and the extent to which approach was used varied across individuals. Critically, we identified that this variability was correlated with the distractor effect during decision making. Individuals who tended to use a multiplicative approach to compute value, showed a positive distractor effect. In contrast, a negative distractor effect (divisive normalisation) was prominent in individuals tending towards an additive approach. Findings suggest that the distractor effect is related to how value is constructed, which in turn may be influenced by task and subject specificities. This concurs with recent behavioural and neuroscience findings that multiple distractor effects co-exist.

Do Investors’ Site Visits Improve Bond Market Pricing Efficiency? —An Empirical Study from the Secondary Bond Market

ABSTRACT Taking bonds issued by A-share companies listed on the Shenzhen Stock Exchange from 2014 to 2020 as a sample, this paper explores the effect of corporate site visits on bond trading spreads. The study finds that the more investors visit a given firm, the lower the trading spreads of bonds issued by that firm, and this phenomenon is more pronounced in companies with greater information asymmetry or agency conflicts. Further research shows that investors evaluate the financial status of the company more accurately through site visits and reduce irrational decisions caused by information uncertainty. Consequently, site visits reduce the financing gap caused by macroeconomic factors. The results show that personal communication between investors and listed companies could provide effective information for bond investors and reduce their information risk. This paper expands the existing research on issues related to secondary bond market pricing and investors’ site visits and provides important empirical evidence for regulators to use to further optimize the bond market disclosure system to reduce information asymmetry.

Is it Irrational to Assume Rationality in Business?

Purpose: Academic research continuously introduces new theories, methodologies, etc. to improve upon prior studies. Researchers commonly base their theories on the assumption that managers and stakeholders have calculated motives and make well-educated decisions. However, they ignore the fact that certain corporate decisions are completely random with no logical explanations. Researchers still are not comfortable with this idea and always try to justify business decisions by advancing new sophisticated theories while in fact, many executives and stakeholders are not that sophisticated. This paper discusses such instances of irrationality. Methodology: This paper discusses several instances of irrational business decisions in various aspects of finance including capital budgeting, capital structure, stock buybacks, executive compensation, overinvestment, and stock market irregularities. By examining a historical set of corporate events, it is shown that various forms of irrationality, when abundant, may cause empirical studies to refute theories. Findings: Theories cannot always be justified by empirical work not necessarily because of flaws in these theories but possibly because of irrational behavior of ill-informed executives and stakeholders. That is, if the assumption of rationality commonly imbedded in academic studies does not hold, then it may be the culprit, at least in part, behind the discrepancy between theory and empirical findings. Unique Contribution to Theory, Practice and Policy: This paper postulates that the discrepancy between theory and empirical findings may, in part, be caused by the common assumption of rationality that may not hold true. By discussing numerous instances of irrational behavior in various aspects of business, this paper attempts to show that irrationality is not uncommon and should be considered in the design of academic research.

The Ending Effect in the Domain of Gambling: The Effect of Gain-Loss Status on Economic Decision-Making.

Previous studies have shown that people prefer risk-taking at the end of gambles, a phenomenon called the ending effect. By using the Guess Gambling Game, we investigated the impact of gain-loss status on the ending effect (Experiment 1) and whether and how this effect may be affected by time reference (Experiment 2) and gender (Experiment 1&2). In Experiment 1, we observed the ending effect only in the gain group. Furthermore, gender differences exist in the loss group behavior, females were more risk-averse than males, and males tend to investment more initially and then reduce their investment in a U-shaped pattern (Experiment 1&2). Next, in Experiment 2, the findings indicated that participants in the gain group made riskier decisions and were willing to allocate more money for additional decision opportunities, irrespective of the time conditions. Additionally, under time-limited condition, participants tended to make more decisions in the final round, aiming to maximize their choices times within the limited time. These results contribute to a better understanding of the boundary conditions surrounding the ending effect in risky decision-making and may offer a scientific basis for mitigating and intervening in irrational decision-making.

Analyzing Irrational Purchase Decision on Aesthetic Packaging: The Moderating Role of Emotional Appeal

This conceptual paper examines how aesthetic packaging affects the purchase decisions of cosmetic products through the Theory of Planned Behavior (TPB) model, irrational factors. The TPB model, comprising Attitude, Subjective Norms, and Perceived Behavioral Control, serves as the analytical framework for consumer behavior. The central issue lies in understanding the influence of packaging aesthetics on decisions, particularly the irrational aspects such as emotional appeal. Emotional appeal is hypothesized to act as a moderating factor, potentially amplifying the perceived value of aesthetically pleasing packaging and leading to less rational purchasing decisions. The methodology includes a purposive sampling of cosmetic product consumers, with the sample size determined using G*Power. Data analysis will be conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). This study seeks to uncover the impact of emotional appeal on packaging aesthetics, providing insights to improve marketing strategies and packaging designs within the cosmetic industry.

Influence of personality, biases on financial risk tolerance among retail investors in India

Investors’ personality traits and psychological biases play a crucial role in the decision-making process and risk-taking behavior of investors. The emotional and psychological factors impact the decision-making, giving rise to biases. These biases make investors make irrational decisions, which signifies the need for this study. This study aims to assess investors’ personalities using HEXACO model and its interaction with biases and financial risk tolerance. The data of 530 retail investors in India, who had more than 2 years of investing experience in the stock market, were collected. The study considered the HEXACO model since it captures all dimensions of personality that are not considered in the commonly used Big Five Model (BFM). The result of structural equation modeling and mediation analysis shows that the ‘honesty-humility’ trait significantly affects overconfidence bias. The mediation analysis of biases between traits and financial risk tolerance showed complete, partial, and no mediation effect depending on the nature of prejudice. Clear distinction of personality traits into ‘virtue traits’ and ‘character traits’ can be observed. This clear distinction paves the way for employing the HEXACO model in future studies.

The influence of psychological factors on investment decision-making: Psychological features of economic relations formation

The article aimed to analyse the influence of psychological factors on the investment decision-making process, which shapes the economic behaviour of investors in Ukraine. The research involved surveys and experimental tasks conducted among investors, with the data analysed using statistical methods to identify the impact of psychological factors on investment decisions. Fear and greed have been found to be most significant emotions affecting investment decisions, whereas fear leads to excessive caution and risk avoidance. In contrast, greed drives investors to take on excessive risks. Overconfidence in one’s knowledge and skills results in an overestimation of opportunities and an increased risk of losses, while confirmation bias leads investors to seek information that supports their previous decisions, ignoring conflicting data. Expert opinions and group behaviour significantly influence investment decisions, particularly under conditions of uncertainty, often resulting in herd behaviour and the formation of economic bubbles. The experimental tasks demonstrated that investors frequently make irrational decisions under the influence of emotions and cognitive biases, even when they can access complete information about risks and opportunities. The survey results also indicated that investors with higher levels of financial literacy are less susceptible to the influence of emotions and cognitive biases, highlighting the importance of financial education in improving the quality of investment decisions. These findings illustrate how psychological factors can distort the investment decision-making process and underscore the necessity of considering these factors when developing investment strategies

Irrational choices via a curvilinear representational geometry for value

We make decisions by comparing values, but it is not yet clear how value is represented in the brain. Many models assume, if only implicitly, that the representational geometry of value is linear. However, in part due to a historical focus on noisy single neurons, rather than neuronal populations, this hypothesis has not been rigorously tested. Here, we examine the representational geometry of value in the ventromedial prefrontal cortex (vmPFC), a part of the brain linked to economic decision-making, in two male rhesus macaques. We find that values are encoded along a curved manifold in vmPFC. This curvilinear geometry predicts a specific pattern of irrational decision-making: that decision-makers will make worse choices when an irrelevant, decoy option is worse in value, compared to when it is better. We observe this type of irrational choices in behavior. Together, these results not only suggest that the representational geometry of value is nonlinear, but that this nonlinearity could impose bounds on rational decision-making.

Regeneration diagnosis for the service lifespans of residential buildings on a circular economy perspective

As urbanized areas progress into the era of stock, an immense number of existing residential buildings (RBs) are destined to undergo replacement and renovation. The irrational decision of urban renewal led to serious economic waste and environmental unsustainability. In this regard, this study proposes and validates a method for regeneration diagnosis and optimal regeneration of RBs based on circular economy (CE) theory. A hybrid diagnostic tool of life cycle cost (LCC)-life cycle assessment (LCA) model to systematically evaluate the economic and environmental impact of RBs throughout the circular lifecycle was proposed. On this basis, with the minimum average annual economic and environmental impact as the objective function, the optimal dynamic regeneration cycle of RBs is obtained using a multi-objective optimization method. The results of the case study show that: (1) The discount rate and deterioration rate changes the development tendency of economic and environmental data, which brings a new regenerating time point, (2) the economic impact of RBs’ regeneration tends to be more pronounced during the intermediate stages, while the environmental impact becomes more significant in the later stages, (3) the environmental benefits of regeneration outweigh the economic benefits, (4) the regeneration of all building elements at the local optimal level leads to enhanced comprehensive benefits compared to multiple regenerations of a single building element. The feasibility of the method employed in this study has been corroborated by practical case studies. This approach transcends the limitations of quantitative analysis in assessing the regeneration of RBs in a circular lifecycle and offers profound implications for the development of urban renewal and sustainable strategies.

Relationship between Rational and Irrational Investment Decisions and Multiple Intelligence of Investors

This study focuses on investors' investment decision-making and examines the influence of multiple intelligences in investment decision-making, both rational and irrational. Multiple intelligences are a group of Intelligence with its entity and domain. Gardner suggests that the human being has different individual units of intellectual functioning. He labels these units as intelligence, each with identifiable and quantifiable aptitudes. The nine intelligence types differently influence an individual's behaviour and decisions. The multiple intelligence Inventory and a questionnaire on investment decision-making were used for data collection from a hundred investors. Analysis was done with the help of Pearson's correlation, multiple regression chi-square test, and correspondence analysis. Rational decision-making is intellectual, as per the review, and it is proved here that intelligence influences rational decision-making significantly while the other is not influenced. The observed results help to get new visions of investment behaviour, including a new proof of the root causes of investment decisions.

Emotion Regulation Can Effectively Improve Decision-Making Behaviors of Individuals Who Use Methamphetamine.

Negative emotions can cause people to make irrational decisions, and decision-making disorders may lead individuals who use methamphetamine (meth) to relapse. Therefore, the current study was performed to investigate whether emotion regulation (ER) can improve negative emotions and thus improve decision-making behavior of individuals who use meth. Based on the Iowa Gambling Task, a three-factor mixed experimental design was used to examine the effects of cognitive reappraisal and expressive suppression strategies on negative emotions and decision-making behaviors of 157 individuals who use meth. Cognitive reappraisal and expressive suppression were effective in reducing participants' negative emotions and improving decision-making behaviors. Specifically, two types of ER strategies were effective in improving decision-making abilities of participants with negative emotional distress, and cognitive reappraisal was more effective than expressive suppression. Regarding cognitive reappraisal, female participants showed better decision-making behavior than males, which predicts that females who use meth might be more adept at using cognitive reappraisal. This finding suggests that mental health providers should aid substance users in managing their negative emotions and also pay attention to gender differences during the nursing process. [Journal of Psychosocial Nursing and Mental Health Services, xx(xx), xx-xx.].

Unveiling the Behavioural Biases of Retail Investors in Derivative Market

The derivative market is growing faster than capital markets in recent years. Investors’ focus is moved towards the futures market rather than on the stock market. The involvement of individual investors has increased in the derivative market. In investing, biases lead investors to make irrational and emotional decisions. The study tracks how investors’ be- havioural biases influence their investment decisions and also analyses the moderating effect of “financial literacy” and “self-efficacy” in the derivatives market. The snowball sampling technique was used to collect the primary data from 125 investors from Coimbatore city. Factor Analysis, Multiple Regression, and Structural equation Model were used for analysis. The results revealed that Behavioural biases such as “Herding Behaviour”, “Overconfidence” and “Mental Accounting” positively affect investing in the derivative market and the mod- erating variables “Financial Literacy”, and “Self-Efficacy” directly influence the behaviour of the investors which in turn affects derivative trading.

COVID-19 pandemic: the role of risk factors related to urban space (Analytical review)

Comfortable urban environment plays a key role in protecting health of people residing in large urban settlements. At the same time, urban space has some peculiarities including high population and building density, imperfect traffic infrastructure, irrational planning decisions, elevated levels of ambient air pollution, heat islands and lack of urban green spaces. All these features of any urban space are significant health risk factors able to facilitate spread of respiratory diseases. This was the most evident during the COVID-19 pandemic. The analytical review examines the results of studies focusing on impacts exerted by these unfavorable urban conditions on COVID-19 infection, incidence, hospitalization and mortality in cities across the globe. Influence of elevated population density on COVID-19 infection is shown to be ambiguous as compared to other risk factors. More reliable data are available on the impact of air pollutants, especially PM, on incidence and mortality rates from the infectious disease in question. Also, the COVID-19 virus and abnormally high temperatures were shown to produce combined effects on mental health during the pandemic. To reduce levels of infection in urban population, a suggestion is to further develop urban infrastructure providing people with retail and other necessary facilities within a walking distance (15 minutes). An important conclusion has been made by experts on elevated risks of infection in dense foot traffic as compared to public buildings. Therefore, it is important to improve communications about the necessity of social distancing. Urban development that aims to reduce infection with respiratory diseases should involve better street aeration. The results of these studies in various cities across the globe gave grounds for making management decisions on providing better mobility in suburban areas in a more comfortable natural environment, developing green areas in cities, and reducing negative effects of the warming climate on heat islands and elevated levels of ambient air pollution. Large open green spaces are the most effective in this respect.

Роль факторов риска городского пространства в пандемии COVID-19 (Аналитический обзор)

Comfortable urban environment plays a key role in protecting health of people residing in large urban settlements. At the same time, urban space has some peculiarities including high population and building density, imperfect traffic infrastructure, irrational planning decisions, elevated levels of ambient air pollution, heat islands and lack of urban green spaces. All these features of any urban space are significant health risk factors able to facilitate spread of respiratory diseases. This was the most evident during the COVID-19 pandemic. The analytical review examines the results of studies focusing on impacts exerted by these unfavorable urban conditions on COVID-19 infection, incidence, hospitalization and mortality in cities across the globe. Influence of elevated population density on COVID-19 infection is shown to be ambiguous as compared to other risk factors. More reliable data are available on the impact of air pollutants, especially PM, on incidence and mortality rates from the infectious disease in question. Also, the COVID-19 virus and abnormally high temperatures were shown to produce combined effects on mental health during the pandemic. To reduce levels of infection in urban population, a suggestion is to further develop urban infrastructure providing people with retail and other necessary facilities within a walking distance (15 minutes). An important conclusion has been made by experts on elevated risks of infection in dense foot traffic as compared to public buildings. Therefore, it is important to improve communications about the necessity of social distancing. Urban development that aims to reduce infection with respiratory diseases should involve better street aeration. The results of these studies in various cities across the globe gave grounds for making management decisions on providing better mobility in suburban areas in a more comfortable natural environment, developing green areas in cities, and reducing negative effects of the warming climate on heat islands and elevated levels of ambient air pollution. Large open green spaces are the most effective in this respect.