This study investigates the complex interrelationships between financial behaviour, risk attitudes, and the demand for life and health insurance within Vietnam's emerging market context. Employing a sophisticated mixed-methods analytical approach combining Partial Least Squares Structural Equation Modelling (PLS-SEM) and fuzzy-set Qualitative Comparative Analysis (fsQCA), this research examines data collected from 487 Vietnamese individuals across diverse socioeconomic strata. The theoretical framework integrates Prospect Theory and the Theory of Planned Behaviour to elucidate the psychological and behavioural mechanisms underlying insurance demand. The empirical findings reveal that financial literacy, financial planning behaviour, and risk aversion collectively exert statistically significant positive influences on insurance uptake, whilst risk perception demonstrates a moderating effect on these relationships. The fsQCA results uncover asymmetric configurational pathways, demonstrating that multiple combinations of financial behaviour and risk attitude dimensions lead to high insurance demand. This research contributes to the insurance economics literature by providing robust empirical evidence from an emerging Asian market, whilst offering practical implications for policymakers and insurance providers seeking to enhance financial protection coverage in developing economies.

Amid mounting environmental pressures and tightening resource constraints in China’s cities, advancing zero-waste city initiatives has become a critical avenue for sustainable urban governance. Zero-waste cities not only improve environmental quality but also enhance resource recycling and foster innovative urban governance models. This study develops an evolutionary game model that incorporates prospect theory to examine the strategic interactions between provincial and local governments. The results show that: (1) each side’s subjective perception of gains and losses significantly shapes its willingness to cooperate; (2) incentives and penalties exert asymmetric effects over the course of policy evolution: subsidies matter most during initiation, penalties are pivotal for overcoming resistance in the transition phase, and non-material incentives become increasingly important as the governance system matures; (3) zero-waste city development follows a three-stage evolutionary trajectory, moving from pilot programs to self-sustaining local governance. Using numerical simulations, this research further assesses how key parameters affect the strategic choices of both levels of government, generating policy-relevant insights for municipal solid waste management and intergovernmental cooperation in zero-waste city governance.

Negative information often exerts a disproportionately strong impact on human decision-making, a phenomenon known as the negativity bias. In behavioral economics, this effect is formally captured by prospect theory, which posits that losses loom larger than equivalent gains. For example, a single negative product review can outweigh numerous positive ones, reflecting this principle of loss aversion in consumer behavior. While this psychological effect has been widely documented, its implications for collective opinion dynamics, critical for understanding market stability and reputation dynamics, remain poorly understood. Here, we generalize the q-voter model with independence by introducing opinion-dependent influence group sizes, q+ and q-, which represent the social reinforcement needed to change an opinion from negative to positive and from positive to negative, respectively. We study two versions of this asymmetric model: a baseline model that reduces to the standard q-voter model when q+=q-=q and an extended model that incorporates an additional asymmetry expressed as a preference for one opinion. In its reduced version, this represents a minimal model in terms of non-linearity within the q-voter framework that allows for discontinuous phase transitions and hysteresis. Using mean-field analysis and computer simulations, we show that these modifications lead to rich collective behaviors, including double hysteresis, one form of which is irreversible, providing a mechanism for path-dependence and the sustained, irrecoverable damage to collective sentiment, brand equity, or market confidence.

Investor trading behavior and intermediate prospect theory value in cross-sectional expected returns

<div>Path selection for the transport of hazardous materials (Hazmats) is a multi-facet decision problem that needs to account for multiple factors such as accident risk as well as transportation cost. Most existing literature has modeled the risk of Hazmats transportation as the product of accident loss, and its probability-based expected utility theory, however, could be problematic since such a risk definition does not necessarily reflect the real perceived risk by the decision-maker. This article proposes a novel approach to the path selection of Hazmats transportation based on the cumulative prospect theory (CPT). Specific steps in the decision of path selection are first laid out in the framework of CPT. Value (Loss) functions of accident in Hazmats transportation are then derived, together with the decision weighting function reflecting accident probabilities. For illustration, a case study is conducted using transportation data from a Hazmats transportation firm in Shanghai. Comparisons of path selections among the newly proposed approach, the existing methods based on expected utility theory, and the actual outcome from the decision-makers clearly indicate the superior performance of the proposed method. The results will enhance the safety level of road transportation of Hazmats.</div>

ABSTRACT Restorative Justice (RJ) is a set of practices to repair harm, give voice to those harmed, and hold those who caused harm accountable for their behaviors. Despite growing interest in RJ to address domestic violence (DV) crimes, research is lacking on the decision-making process to implement RJ programs. Guided by prospect theory, this study explores stakeholders’ experiences with and perspectives regarding the decision-making process in choosing, adapting, and implementing Circles of Peace, an RJ peacemaking circle approach, as an alternative DV intervention program. Multiple semi-structured interviews with the stakeholders (N = 8) were conducted, and thematic analysis was used to analyze their narratives. Three major themes emerged: (1) Drivers: Factors leading stakeholders to seek alternative approaches to address DV; (2) Barriers: Challenges arising in the decision-making process; and (3) Facilitators: Helpful components in the decision-making process. Stakeholders’ frustration with the criminal legal system’s primary response and their willingness to explore alternative methods to address DV crimes were found to be critical driving factors. Structural barriers and stakeholders’ lack of prior knowledge of RJ and Circles of Peace emerged as major challenges. The findings highlight the significant role that a supportive stakeholder and rigorous research evidence played in the decision-making process.

This study examines how workplace incivility affects counterproductive work behavior in Pakistani manufacturing using fuzzy regression to address a practical problem: traditional regression gives point estimates, but managers need cost ranges to plan realistically. Survey data from 395 employees across pharmaceutical, food, and textile sectors provides the basis for this analysis. Structural equation ‎modeling shows that psychological distress partially mediates the relationship (30%), aligning with prior research. However, fuzzy regression reveals something traditional methods miss: this mediation proportion actually ranges from 12% to 74% depending on individual differences. Prospect theory helps explain why employees with higher loss aversion respond more intensely when incivility defies their expectations about workplace treatment. The fuzzy approach offers practical advantages. It produces bounded estimates that ‎support scenario-based budgeting, doesn't require parametric assumptions that workplace data often violate, and explicitly acknowledges ‎that survey responses aren't perfectly precise measurements. For Pakistani manufacturers working with limited resources, these bounded ‎estimates enable three-tiered budgeting: conservative plans using lower bounds, target budgets using center estimates, and contingency ‎reserves for upper bounds. This matches how organizations already handle other uncertain investments. The findings also suggest that ‎mental accounting biases likely contribute to underinvestment in workplace interventions costs get dispersed across departments while ‎intervention expenses consolidate in training budgets‎.

This paper presents the learnings from a study that used qualitative research methods to explore how to promote agroecological transitions (AETs), conducted over four years with Bolivian farmers and consumers in Cochabamba. The study examines how different motivations and production practices shape farmers’ engagement with agroecology. The research applied thematic analysis to construct farmer typologies and identify factors influencing perceptual and behavioural transformation towards AE practices. The results show three farmer typologies based on motivations and production practices: i) conventional production and offer; ii) mixed production and offer; and iii) AE production and offer. Thematic analysis identified a set of primary and secondary factors common across typologies that affect transformations towards AE, with the main factors including risk-aversion, plot size and family tradition, and secondary ones such as health and new AE knowledge versus family tradition. A gap emerged in how these factors affect changes in perspectives and behaviours across farmer types. Understanding the role of context-specific factors in AE transformations is essential to improve AE training and implementation approaches, and the discussion interprets farmers’ risk perceptions through behavioural economics, particularly Prospect Theory, which highlights loss aversion and reference-dependent decision-making.

Existing fire emergency decision-making models often struggle with accurately handling multi-granularity uncertain linguistic information, loss aversion, and a lack of adaptability to dynamic fire evolution. To address these gaps, this study adopts two-tuple linguistic representation (2TLR) for quantifying multi-granularity linguistic information and combines the Analytic Hierarchy Process (AHP) with the entropy weight method (EWM) to determine the ability weights of the experts. Furthermore, a six-dimensional dynamic reference point is generated via the random forest algorithm, and the integration of prospect theory (PT) with a sequential decision-making framework (SDF) is implemented for the dynamic optimization of response plans. Validation through real-world cases demonstrates that the proposed Multi-stage Prospect Selection (M-PS) model outperforms both the TOPSIS method and the single PT model, compared with these two methods, the proposed M-PS model can effectively prioritize the avoidance of high-risk scenarios, accurately reflect decision-makers’ loss aversion tendency, and realize dynamic decision-making through updating the decision plan sequentially, thereby providing reliable support for urban fire emergency management. At the same time, in this study we conduct a comparative analysis of core metrics between existing methods and the proposed M-PS model. The evaluation across five dimensions demonstrates that the proposed M-PS model delivers superior performance.

This research extends the current understanding of tourist loyalty for small island destinations. Using cumulative prospect theory, we establish and test research models to examine the such underlying determinants as motivation, the theory of planned behavior, image, and risk factors on tourist loyalty. Through the adoption of necessity and sufficiency logic, this research successfully identifies four exclusive conditions for tourist loyalty: necessary and sufficient, necessary but insufficient, unnecessary but sufficient, and unnecessary and insufficient. Subjective norm and affective image were found to be critical aspects required for the occurrence and enhancement of tourist loyalty. Additionally, through case-based analysis, the study reveals that multiple necessary conditions and complex combinations of the above antecedents can also impact tourist loyalty, emphasizing the intricate nature of the factors influencing tourist loyalty in small island destinations. Theoretical significance and practical implications are discussed.

Post-earthquake waste disposal planning constitutes a critical preliminary stage of post-disaster reconstruction. The efficacy of collaboration among stakeholders in this phase directly impacts environmental and social benefits. Nevertheless, there is a deficiency of a clearly defined collaborative mechanism between governments and enterprises during post-earthquake waste disposal. Therefore, this paper commences from the post-disaster reconstruction phase, formulating a two-sided evolutionary game model for local governments and waste management enterprises grounded in the perspective of bounded rationality. The model employs replicator dynamics to analyze evolutionary stable strategies and equilibrium conditions. It is further refined by incorporating prospect theory to explore the dynamic mechanisms through which governmental supervisory intensity and enterprise technological choices interact. Additionally, this study examines how various factors influence decision-making processes at both government and enterprise levels. The theoretical model and its equilibrium results are validated through a realistic case simulation based on the 2008 Wenchuan earthquake. The findings reveal that government-enterprise collaboration is inherently unstable and highly sensitive to synergistic parameter effects. For instance, collaboration is significantly promoted by increasing policy tax incentives alongside either higher enterprise revenues or lower government supervision costs. Analysis of enterprise decision-making indicates that the key strategic trade-off involves balancing the costs of resource utilization against the additional benefits gained and the potential losses incurred from neglecting such utilization. Furthermore, social prestige gains exert an implicit influence by affecting the probability of mass incidents and the degree of loss aversion within the government-enterprise synergy.

To enhance decision-making, humans often use AI, but over- or under-reliance can negatively impact performance. Although AI accuracy is presented to users for reliance calibration, prior work shows that stated AI accuracy often does not lead users to rely on AI in proportion to it. To explore this, we examined how users interpret stated AI accuracy as a cue. Experiment 1 explored decision shifts across differing accuracy levels (N = 91); Experiment 2 modeled the subjective weight attached to each level (N = 20). The results align with prospect theory, indicating that participants tend to undervalue high accuracy and overvalue low accuracy. At the same time, we found that compared with not providing accuracy information, presenting reliable and well-calibrated AI accuracy can potentially reduce their misperception of that and thus may offer some benefits for calibrating reliance. Based on our findings, we discuss the design implications for fostering appropriate reliance.

This study reveals that the risk exposure of Chinese A-share listed companies with respect to public health, safety, and environmental (HS&E) concerns is associated with an increase in fraudulent behavior. Based on the reflection effect and the loss aversion effect posited by prospect theory, we demonstrate that firm-specific HS&E risk exposure increases the firm's risk-taking and propensity to disclose good news, thereby increasing the likelihood of the firm engaging in fraudulent activities. In addition, from the perspectives of motivation and governance, our research further demonstrates that the impact of HS&E risk exposure on corporate fraud is more pronounced in companies that are characterized by lower executive compensation, lower environmental, social, and governance (ESG) performance, lower independent director network centrality, and a lower proportion of members of the Communist Party of China among executives.

Prospect theory in the field: Revealed preferences from mutual fund flows

Lend to a friend, lose a friend? Guilt, shame, and the emotional costs of informal borrowing.

This study applies Prospect Theory to examine how star rating classification affects the relationship between price dispersion, price fairness, and customers' decisions when choosing a hotel and booking channel. Data were collected from 207 hotel customers using Trivago’s metasearch engine in a scenario-based experimental design to test the hypotheses. The findings show that star ratings significantly influence hotel booking choices, with customers favouring cheaper options in wide price dispersion scenarios and more expensive options in narrow price dispersion scenarios. This study contributes to the literature by extending Prospect Theory to metasearch platforms and revealing how star ratings moderate the effects of price dispersion and fairness on the booking channel. The results provide valuable insights for hotel managers and online travel agency practitioners in developing effective marketing and pricing strategies.

Summary A model-based workflow is presented for computable decision under uncertainty (DUU). The workflow can generate solutions to mitigate subsurface and operational uncertainties for transparent and robust decision-making. It consists of scenario generation, physics-based modeling, uncertainty assessment, economic analysis, and solution mining. A behavioral economics theory, cumulative prospect theory (CPT), is considered in the workflow to account for the effect of uncertainties on overall economics and decision. A decision tree is generated by mining the simulation results to inform decisions that make full sense in physics and in economics. The usefulness of this workflow is illustrated with an exemplary problem in steamflooding for heavy-oil recovery. The results show that the introduction of CPT for some cases may change the decision that was made on the basis of conventional expected utility theory (EUT).

Enhanced indexing using cumulative prospect theory utility function with expectile risk

In recent years, the operational performance of agricultural enterprises has been influenced by both natural conditions and market environments, resulting in high uncertainty and volatility. When performance falls below expectations, agricultural enterprises consciously engage in strategic change and proactive risk-taking to alleviate performance pressures. Based on Firm Behavioral Theory, Performance Feedback Theory, and Prospect Theory, we examine how performance expectation gap affects risk-taking of agricultural enterprises by using panel data of Chinese A-share listed agricultural firms from 2007 to 2023. The results show that performance expectation gap has a positive effect on risk-taking, which means the greater the gap, the higher the level of risk-taking. And the better developed the institutional environment, the greater the tendency for risk-taking. Further analysis shows that performance expectation gap promotes risk-taking by driving strategic change within agricultural enterprises. This research enriches the study on the influencing factors of risk-taking in agricultural enterprises, offering decision-making insights for them to prudently assess and manage risks.

Abstract: While enhanced Financial Literacy theoretically correlates with improved micro-business outcomes, empirical evidence reveals inconsistent findings across diverse contexts and regional markets. This contradiction exemplifies the knowledge-implementation gap within behavioral finance literature, where theoretical understanding fails to automatically translate into superior operational performance. This investigation analyzes the complex relationships between Financial Literacy and business effectiveness among micro-tourism operators through three critical mediating mechanisms: Financial Experience, Credit Access, and Financing Decisions within emerging economy contexts. Data were collected from 383 micro-tourism business owners across the Greater Malang region, Indonesia, using a two-stage stratified proportional random sampling approach. This research utilized a quantitative explanatory approach through cross-sectional survey methodology. Statistical analysis utilized Partial Least Squares Structural Equation Modeling via SmartPLS 4.0, integrating four fundamental behavioral finance theoretical frameworks: Expected Utility Theory establishing rational choice foundations, Prospect Theory explaining cognitive biases and decision-making limitations, Signaling Theory addressing information asymmetries between micro-businesses and financial institutions, and Pecking Order Theory illuminating financing preference hierarchies within capital-constrained environments. The analysis demonstrates that Financial Literacy lacks direct influence on Financial Performance (β = 0.019, p = 0.769), but rather operates through sequential mediation pathways involving Financial Experience, Credit Access, and Financing Decisions. Credit Access emerges as the strongest mediating pathway (β = 0.113, p < 0.001), followed by Financial Experience (β = 0.112, p < 0.01) and Financing Decisions (β = 0.068, p < 0.01). The comprehensive model explains 54.2% of Financial Performance variance with substantial predictive validity, providing robust empirical support for behavioral finance applications in micro-enterprise contexts. The results suggest that MSME development initiatives require holistic ecosystem strategies that transcend conventional financial education approaches, incorporating enhanced Credit Access mechanisms, structured Financial Experience programs, and comprehensive decision-support systems. The research enhances behavioral finance scholarship by explaining the complex transformation processes by which Financial Literacy translates into Financial Performance within emerging market tourism contexts. Keywords: Credit Access, Financing Decisions; Financial Experience, Financial Literacy, Financial Performance