Risk-averse Behavior Research Articles

Risky hybrid foraging: The impact of risk, reward value, and prevalence on foraging behavior in hybrid visual search.

In hybrid foraging, foragers search for multiple targets in multiple patches throughout the foraging session, mimicking a range of real-world scenarios. This research examines outcome uncertainty, the prevalence of different target types, and the reward value of targets in human hybrid foraging. Our empirical findings show a consistent tendency toward risk-averse behavior in hybrid foraging. That is, people display a preference for certainty and actively avoid taking risks. While altering the prevalence or reward value of the risky targets does influence people's aversion to risk, the overall effect of risk remains dominant. Additionally, simulation results suggest that the observed risk-averse strategy is suboptimal in the sense that it prevents foragers from maximizing their overall returns. These results underscore the crucial role of outcome uncertainty in shaping hybrid foraging behavior and shed light on potential theoretical developments bridging theories in decision making and hybrid foraging. (PsycInfo Database Record (c) 2024 APA, all rights reserved).

Analysis of the impact of different background colors in VR environments on risk preferences.

Metaverse virtual reality (VR) technology offers an environment that provides a sense of presence that cannot be achieved through traditional online interactions. Although this technology is used in education and industry, challenges remain to be overcome for further penetration into society. In this study, we conducted an experiment using a risk preference task in blue and red spaces to verify color impressions and their effects in VR environments. Consistent with previous studies, high calmness was observed in the blue space. However, contrary to expectations, the risk preference task results showed risk-averse behavior in red space but not in blue space. Therefore, conventional color psychology may not be applicable to constructing the same space in a virtual environment. Previous studies have shown consistent experimental results regarding emotional responses to color stimuli; however, no consistent outcomes have been reported regarding cognitive performance. This is because the effect of color impressions is thought to depend not only on the color itself but also on what is recalled. The results of this study suggest that red in a VR environment may be interpreted as a warning color, preventing people from losing focus.

Stochastic generalized standard materials and risk-averse effective behavior

Stochastic generalized standard materials and risk-averse effective behavior

Concentrated bank market and SMEs’ collateral issues: a study of the firms of developing Asian countries

Collateral is a significant challenge for small and medium enterprises (SMEs) in acquiring formal credit. Bank market concentration can cause to increase collateral demand through enhancing bank market power. This study explores the relationship between bank market concentration and the collateral challenges faced by SMEs in accessing bank credit by employing a probit regression model. The analysis utilizes a sample of over 25,000 firms from 19 developing Asian nations. The datasets combine firm-level data sourced from the Business Environment and Enterprise Performance Survey (BEEPS) with country-level financial data obtained from the Global Financial Development Data (GFDD) which are provided by the World Bank. The results reveal a significant positive correlation between bank market concentration and the collateral challenges encountered by SMEs in developing Asian countries. In markets characterized by high levels of banking concentration, financial institutions tend to exhibit risk-averse behavior, manifesting in an increased propensity to demand collateral for both SME and large enterprise loans. Consequently, this heightened bank concentration exerts additional pressure on SMEs in acquiring bank credit. To foster an environment conducive to SME financing, countries with high levels of banking concentration should enact regulatory measures aimed at managing and constraining market concentration levels.

Through the Lens of Neoclassical Realism: Understanding the Decline in Malaysia– India Relations Under Mahathir 2.0

This article suggests that since the end of the Cold War, Malaysia’s foreign policy towards a rising India has significantly intertwined with its overarching hedging calculations vis-à-vis the burgeoning power competition between the United States and China. Hedging, based on the conceptualization of Dr Cheng-Chwee Kuik, incorporates a largely structure-induced logic that encompasses a survival-driven, risk-averse and insurance-seeking behaviour to ensure the survival of less powerful states without putting all eggs in one great power’s basket due to concerns over future uncertainty. While the US and China are the most immediate and consequential structural factors impacting Malaysian foreign policy, Kuik presents the concept of dominance-denial as a sub-element of hedging, where a less powerful state aims to forge positive and functional ties with all major powers in the system based on its economic and security interests. Strengthening ties with India has been crucial in Putrajaya’s dominance-denial strategy. However, while Malaysia–India economic and defence ties continued to grow since the 1990s, bilateral relations backslid in 2019 due to former Malaysian Prime Minister Mahathir Mohamed’s provocative stance towards New Delhi, leading to a considerable decline in economic relations. Therefore, this article seeks to theoretically explain these constraints in the relations between Putrajaya and New Delhi through a neoclassical realist lens in order to supplement Kuik’s hedging framework.

Nasal injuries in amateur male boxers before and after the 2013 rule change by the International Boxing Association removing the protective headgear

Boxing is a popular combat sport in which participants frequently experience head trauma. The neurological impact of boxing has been widely discussed, but the impact on the bone and soft tissue of the head has been less investigated. For this study, a national emergency department database was used to investigate the impact of a 2013 rule change — removing the requirement for amateurs to wear head protection — on the frequency and type of facial injuries sustained by amateur boxers. Over the study period (2006–2021) there were 11 760 injuries, with 6261 occurring before the change and 5499 occurring after (p < 0.001). The number of contusions, fractures, hematomas, and hemorrhages all significantly decreased after the rule change, while the number of lacerations did not. Additionally, the number of septal deviations increased from 16 to 97 (p < 0.001). According to age-group-specific analysis, injuries decreased in both the 0–17 and 24–29 cohorts, but increased in the 18–23 group. The results suggest that the rule change may have had a protective effect on the risk of craniofacial trauma in amateur boxers, potentially due to increased risk-averse behavior by the boxers, who may feel less protected during sparring because of the lack of head protection.

Decision-making in closed-loop supply chains: Effects of government subsidies and risk aversion

Closed-loop supply chains (CLSCs) play a crucial role in promoting sustainable resource management, yet their implementation faces challenges in balancing economic viability with environmental goals. While existing research has explored various aspects of CLSC operations, the interplay between government subsidies and risk-averse behavior of supply chain members remains understudied, particularly in systems involving third-party recyclers. This gap hinders the development of effective policies and management strategies for sustainable CLSCs. Herein, we employ a Stackelberg game-theoretic model to investigate decision-making processes in CLSCs under four distinct subsidy scenarios, incorporating risk aversion through mean-variance utility functions. Our results reveal that subsidy effectiveness significantly depends on remanufacturing costs and risk attitudes of supply chain participants. When remanufacturing costs are high, subsidizing third-party recyclers yields superior environmental and economic outcomes, whereas manufacturer subsidies prove more effective when these costs are low. Moreover, we identify critical thresholds in subsidy levels and risk aversion that alter decision-making patterns. These findings provide a framework for designing targeted subsidy policies and risk management strategies in CLSCs, advancing the field of sustainable supply chain management by offering nuanced insights into the complex dynamics between government interventions, risk preferences, and CLSC performance.

Channel and pricing strategies in a risk-averse dual-channel supply chain: portfolio trade credit financing and platform investment

ABSTRACT This paper considers a dual-channel supply chain where the supplier can distribute products through an online platform and a capital-constrained traditional offline retailer. The retailer needs to fund its business by a portfolio financing of trade credit and platform investment to enter the market. With the price-dependent market uncertain demand, the supplier faces choices among direct, traditional, and dual channels for product distribution. We use the CVaR criterion to formulate the retailer’s risk-averse behaviour. Then derive the optimal retail channel strategy in a Stackelberg game model where the platform leads by setting a revenue-sharing rate. Our results unveil a Pareto improvement region in revenue sharing rates within the portfolio financing scheme. As the slotting fee escalates, the supplier tends towards traditional channels. Conversely, with a modest slotting fee, a threshold emerges for the retailer’s risk aversion, delineating the optimal retail channel. High retailer risk aversion favours the dual channel, while lower aversion steers all members towards the direct channel. Theoretical findings are validated through numerical analysis.

Local and global dynamics of a prey–predator system with fear, Allee effect, and variable attack rate

Fear prompts prey to adopt risk-averse behaviors, such as reduced foraging activity, increased vigilance, and avoidance of areas with high predator presence, which affects its reproduction. In a real scenario, a population requires a minimum density to avoid extinction, known as an Allee threshold. In light of these biological factors, we propose a predator–prey model with (i) a fear effect in a prey population, (ii) an Allee effect in a predator population, and (iii) a non-constant attack rate that modifies the functional response. We ensured the non-negativity and boundedness of the solutions and examined the local and global stability status for each existing steady state solutions. We investigated some deep dynamical properties of the system by varying different parameters, such as cost of fear in prey and strength of the Allee effect in predators and their mortality rate. In codimension one bifurcations, we observed saddle node, Hopf, homoclinic, and coalescence of two limit cycles. Additionally, codimension two bifurcations were observed, including Bautin and Bogdanov Takens bifurcations. To provide a clearer understanding of these bifurcations, we conducted biparametric analysis involving the fear and Allee parameters, as well as the fear parameter and predator mortality rate. Our investigation shows that cost of fear and strength of Allee strongly influences the survival status of the predator. Furthermore, bistability and tristability reveal that the survival and extinction of predator are dependent on the initial population level. Numerical simulations and graphical illustrations are provided to support and validate our theoretical findings.

The measurement of fraud perception of investors and the mediating effect of risk aversion: the case of crypto assets

Purpose This study aims to gain a new perspective on auditing by measuring investors’ fraud perception and to reveal the necessity of increasing individuals’ fraud perception by determining the effect of fraud perception on the intention to invest in crypto assets from the investor’s perspective. Design/methodology/approach As part of this quantitative research, a survey was conducted on individuals residing in Türkiye and aged 18 years and above through a convenience sampling method. A total of 446 participants were included in the study. The data collected was analyzed using the partial least squares-variance based structural equation modeling (PLS-SEM) method using the SmartPLS program. Findings Fraud perception causes individuals to be more risk-averse and reduces their intention to invest in crypto assets. At the same time, it has been observed that risk-averse individuals have lower intention to invest in crypto assets. According to the results of the mediating effect analysis, risk aversion behavior partially mediates between the fraud perception and the intention to invest in crypto assets. Among the emotions, only fear increases risk aversion behavior. Among the personality traits, extroversion and openness to experience personality traits reduce risk aversion behavior, whereas neuroticism personality traits increase the intention to invest in crypto assets. Originality/value In an environment where traditional auditing activities are insufficient, increasing investors’ perceptions of fraud can reduce fraud-related losses. In this context, to the best of the authors’ knowledge, the present study might be among the first to investigate the impact of individuals’ perceptions of fraud on their investment intentions in crypto assets.

Dynamic leverage policy in Islamic and conventional banks during crises in the OIC countries: a procyclicality and prospect-theory analysis

Purpose The purpose of this study is to investigate and compare the dynamic leverage policies of Islamic and conventional banks within selected Organization of Islamic Cooperation (OIC) countries. The study specifically focuses on the concepts of leverage procyclicality and prospect theory. Design/methodology/approach To achieve the research objectives, the study uses data from three distinct periods: Crisis I (2007–2009), Crisis II (2011–2012) and Crisis III (2020). The analysis uses dynamic panel-data regression, using the generalized method of moments (GMM) technique. Findings The research findings indicate that both Islamic and conventional banks demonstrate leverage procyclicality. Interestingly, Islamic banks exhibit weaker leverage procyclicality during normal conditions but display stronger procyclicality during crises compared to their conventional counterparts. The application of prospect theory reveals that both bank types exhibit risk-taking or risk-averse behavior through leverage under certain financial and market performance measures as the first-level domain of the gain-vs-loss condition. Furthermore, during crises (as the second-level domain of the normal-vs-crisis condition), both Islamic and conventional banks experience heightened leverage. Notably, Islamic banks, owing to their lower risk exposure and greater shock resilience, demonstrate lesser risk-taking behavior through leverage than conventional banks, both during periods of underperformance and worsening conditions amid crises. These findings validate the extension of prospect theory's applicability in a two-level domain perspective. The dynamic nature of leverage policy, being procyclical and adhering to prospect theory, also varies following different crises specifically. Research limitations/implications The study's limitations include the unequal crisis periods (Crises I, II and III), leading to an imbalanced examination of their effects, certain financial and market performance metrics that fail to corroborate the expected hypotheses and the limited generalizability of findings beyond the selected OIC countries. Practical implications Understanding the intricate dynamics and behavioral aspects of leverage policy for both Islamic and conventional banks, particularly during crisis scenarios, proves crucial for reviewing banking regulations, making informed financial decisions and managing risks effectively. Originality/value This study enriches the current knowledge by presenting two key points. First, it highlights the dynamic nature of leverage procyclicality in Islamic banks, showing a change from weaker procyclicality in normal conditions to stronger procyclicality during crises compared to conventional banks. Second, it expands the application of prospect theory by introducing a dual-level domain context. Examining the comparative leverage policies of Islamic and conventional banks during different crises within OIC countries provides novel insights into leverage procyclicality and behavioral responses.

How Can Risk-Averse and Risk-Taking Approaches be Considered in a Group Multi-Criteria Decision-Making Problem?

We propose an alternative decision-making methodology based on adopting a mixed risk-averse and risk-taking behavior, improving the objectivity of decision-making. We demonstrate the methodology by prioritizing Iranian tourism centers’ activity under pandemic conditions, providing insights to policymakers on those to keep active or reduce the activity of – hence, those worth developing ahead of future disease outbreaks. This research follows a three-step methodology. First, criteria for evaluation are identified and categorized into tourist attractions, infrastructure, and healthcare dimensions. Second, criterion weights are calculated based on expert opinions, collected using a best-worst method-based questionnaire. Third, tourism centers are evaluated by employing risk-averse and risk-taking best-worst methods. We identify popular attractions, general services, and drugstore accessibility as the primary indicators of tourist attractions, infrastructure, and healthcare, respectively. By clustering tourism centers using K-means algorithm, we find that, in order, the cities of Semnan, Kerman and Zahedan are the tourism centers most suited to staying active during disease outbreaks. For multi-criteria decision-making problems that rely on experts’ evaluations, the proposed methodology can improve the reliability of decision-making. The methodology and framework presented can be used to support various types of decision-making, including evaluation, ranking, selection or sorting.

Optimal supply chain performance: risk aversion to green innovation

PurposeAlthough many countries are focusing on the management of construction and demolition waste (CDW) resource utilization, the effect of risk aversion of the green innovation-led enterprise on the performance of the CDW resource utilization supply chain is unclear when considering different green innovation contexts (green innovation led by the building materials remanufacturer or by the construction waste recycler). This study aims to investigate how the level of risk aversion of the green innovation-led enterprise affects CDW resource utilization under different green innovation contexts based on contingency theory.Design/methodology/approachUsing Stackelberg game theory, this study establishes a decision model consisting of a building materials remanufacturer, construction waste recycler and CDW production unit and investigates how the level of risk aversion of the green innovation-led enterprise under different green innovation contexts influences the performance level of the supply chain.FindingsThe conclusions are as follows. (1) For the green innovation-led enterprise, the risk-averse behaviour is always detrimental to his own profits. (2) For the follower, the profits of the construction waste recycler are negatively correlated with the level of risk aversion of the green innovation-led enterprise in the case of a small green innovation investment coefficient. If the green innovation investment coefficient is high, the opposite result is obtained. (3) When the green innovation investment coefficient is low, the total supply chain profits decrease as the level of risk aversion of the green innovation-led enterprise increases. When the green innovation investment coefficient is high, total supply chain profit shows an inverted U-shaped trend with respect to the degree of risk aversion of the green innovation-led enterprise.Originality/value(1) This study is the first to construct a green innovation context led by different enterprises in the CDW resource utilization supply chain, which provides a new perspective on green management and operation. (2) This study is the first to explore the operation mechanism of the CDW resource utilization supply chain based on contingency theory, which provides new evidence from the CDW resource utilization supply chain to prove contingency theory. At the same time, this study examines the interactive effects of the green innovation cost coefficient and the degree of risk aversion of green innovation-led enterprises on the performance of supply chain members, expanding the contingency theory research on contingencies affecting enterprise performance. (3) This study will guide members of the CDW resource utilization supply chain to rationally face risks and achieve optimal supply chain performance.

Economic, Social, and Environmental Factors Impacting Resilience and Disturbances of Lithuanian Family Farms

Climate change, changes in the natural environment, changing markets, price volatility, etc. pose tension and threats to the future of European Union farms. The uncertain future of family farms requires farm resilience—the ability to survive, adapt, and grow in the face of turbulent change. The limited resilience of family farms has become an important concern for rural and agricultural policy. The main goal of this work is to identify disturbances affecting Lithuanian family farms, assess their influence, investigate the general resilience of Lithuanian family farms, propose measures to reduce the vulnerability of farms, and increase the general resilience and sustainability. We used a combination of qualitative and quantitative research methods to conduct the research. Survey research was conducted using a semi-structured expert interview in which various types of variables were collected. The survey questionnaire, consisting of 38 groups of questions, was sent by email to 500 randomly selected family farmers in January 2024 and collected in the same month. The statistical analysis of the data from the 205 duly filled-out questionnaires was carried out using correlation analysis. In this article, we apply the concept of general resilience of the family farm in the direction of robustness, adaptability, and transformability. We identify the main factors influencing the general resilience of the family farm and study the main attributes of the resilience of family farms. We find some links between family farm characteristics, vulnerability factors, and general resilience capabilities, and we make several proposals to increase family farms’ resilience. The obtained results prove that higher education, larger farm sizes, higher agricultural sales, and employment of permanent workers are associated with better resilience. Furthermore, increasing environmentally friendly practices positively impacts resilience. Older farms and farmers, longer durations of farming activity, and risk-averse behaviors tend to decrease resilience. Due to local and global circumstances, economic and social changes have occurred very quickly in recent years, so the results obtained in the study may not be valid in the long term. Similar surveys after several years will be necessary to study the resilience of Lithuanian farms, including deeper economic analyses that evaluate factors such as price sensitivity, the level of farm debt, and market access.

Are women more risk averse in investments? Brazilian evidence

PurposeThis paper seeks to investigate whether women exhibit greater risk-aversion behavior than men in investments by estimating the influence of gender on portfolio volatility.Design/methodology/approachData on the volatility observed in the portfolio in the last six months, last twelve months and since the individual became a client at one of the largest financial institutions in Brazil – and in Latin America – that operates in the capital markets are used. In addition to the gender explanatory variable, socioeconomic variables such as age, marital status, suitability, residence in capitals and declared assets are controlled, and multiple linear regression models are controlled.FindingsThe results show that gender is statistically significant in all models estimated to explain the volatility of investment portfolios, saying that women are more risk averse than men.Originality/valueThese findings are useful for the scientific literature that investigates behavioral finance by bringing empirical evidence for Brazil.

Informing inclusive park planning: Neighborhood park visitation modeling based on smartphone big data in Austin, Texas

This research uses smartphone-based big data to explore how socioeconomic, built environment characteristics, and spatiotemporal factors influence neighborhood park use, with a specific focus on minority groups’ park visitation patterns. Panel data are collected through SafeGraph, and combined with GIS and American Community Survey data. We analyze 12,227 visitations from 1121 block groups to 30 neighborhood parks from September 2019 to August 2020 in Austin, Texas. Time-fixed-effect nested regression models are employed to control for unobserved time-related effects. Findings indicate a substantial increase in overall park use during the pandemic, with visiting frequencies up by 22 % and dwell time by 56 %. In contrast, minority groups, including seniors, children, blacks, unemployed, living alone, and recent movers, exhibited a decline in park visits. It also highlights visitors’ risk-averse behaviors during the pandemic, such as avoiding visiting parks during holiday weeks and avoiding using swimming pools. Before the pandemic, proximity held the utmost significance for park use; during the pandemic, park quality and facilities emerged as the primary factors influencing park utilization. This study suggests that park planning needs to improve neighborhood parks’ proximity, park facilities, and park safety to boost park use and foster inclusive park planning.

Risk-averse behavior and incentive policies: A new perspective on spatial–temporal traceability supervision in construction logistics supply chains

Spatial-temporal decision support systems (STDSS) serve as a crucial strategy for enhancing operational governance and mitigating risk within construction logistics. However, construction supply chains involve many opaque stakeholders, hindering whole industry compliance monitoring. This research formulates a tripartite evolutionary game model that scrutinizes the strategic interactions among government regulators, carriers, and contractors, thereby offering insights into the collaborative supervision outcomes shaped by these stakeholder engagements. Government regulators choose intelligent supervision incentives versus regular oversight. Carriers decide whether to invest in STDSS or not. Contractors cooperate by enrolling or declining STDSS. As key STDSS investors, carriers’ decisions are investigated under varying risk preferences in an extension model. This examines how government incentives influence long-term intelligent supervision and risk aversion behavior emergence to improve safety and quality across construction supply chains. Our findings indicate that increased adverse events motivate government regulators to adopt STDSS incentives for oversight, though carriers and contractors are not necessarily prompted to implement STDSS themselves. Escalating risk aversion reduces carrier STDSS adoption likelihood as they maintain basic services. Carriers perceiving contractor free riding as unfair competition also demotivates STDSS rollout. Although larger subsidies initially raise STDSS implementation probability, carriers become unwilling to adopt STDSS over time even with greater subsidies. In summary, adverse events drive regulator but not necessarily carrier and contractor STDSS adoption, while risk aversion, perceived fairness and changing subsidy effectiveness over time shape carrier decisions.

Public Debt and It’s Impact on Bank Behaviour and Financial Efficiency: Ghana in Perspective

This study explored the impact of public debt on bank behaviour and financial efficiency in Ghana amid rising global and national debt levels exacerbated by the COVID-19 pandemic’s economic repercussions. An exploratory research design employing a quantitative approach was used to analyze the perceptions of 201 banking professionals across Ghana. The study utilized cluster and purposive sampling techniques to ensure a representative sample. Data were collected on banks’ risk-averse behaviour, credit availability, interest rates, and investment decisions in relation to public debt levels, using survey instruments and regression analysis to quantify the impacts. The findings reveal significant concerns among banking professionals regarding the influence of high public debt on conservative lending practices, increased interest rates, reduced credit availability, and adverse effects on banks’ profitability and the financial system’s stability. Regression analysis confirmed a negative relationship between public debt and financial efficiency, indicating that rising public debt levels may hinder the sector’s operational effectiveness. These results underscore the critical need for strategic fiscal management to mitigate the risks associated with high public debt levels on financial stability and development. Policymakers and financial institutions are urged to consider measures that promote financial sector efficiency and sustainable debt levels, including fiscal consolidation strategies, diversification of investment portfolios, and enhancement of risk assessment models. This study contributes to the empirical discourse on the effects of public debt on financial development by providing insights specific to the Ghanaian context, which has been relatively underexplored.

The impact of stress on the risk decision-making process.

The effect of stress on risk-taking or risk-averse behavior in decision-making has been inconclusive in previous research, with few studies revealing the underlying neural mechanisms. This study employed event-related potentials technique and combined a social cold pressor assessment test with a mental arithmetic task to induce stress responses, aiming to investigate the influence of exogenous stress on the risk decision-making process. Stress induction results indicated that, in addition to raising heart rate and blood pressure, stress responses were accompanied by enhanced negative emotions, diminished positive emotions, and alterations in neural activity. The outcomes of risk decision-making showed that stress did not significantly affect risk preference or time of choice but did reduce the feedback-related negativity/reward positivity, with a particularly significant effect observed for large outcomes. Stress also altered the amplitude of the P3 component, with stress decreasing the P3 value for winning outcomes relative to losing outcomes. The study suggests that understanding how stress affects risk preference should consider the emotional valence induced by stress. Contrary to the reward sensitivity hypothesis, stress weakened reward sensitivity. Stress led to changes in the allocation of cognitive resources for outcome evaluation: compared to negative outcomes, stress reduced cognitive resources for positive outcomes, which might be related to the enhanced negative emotions induced by stress. The study highlights the importance of focusing on the subjective emotional experience induced by stress in future research on stress and risk decision-making.

Are annuities an inferior or normal good? Evidence from a less-developed country

One crucial decision made at retirement in Chile is whether to acquire an annuity or a phased withdrawal (PW) scheme. Annuities, unlike PW, do not allow for inheritance and provide smaller initial pension benefits while protecting against longevity and capital market risks. If preferences show decreasing absolute risk aversion (DARA), then an annuity (insurance) should be considered an inferior good. We test this hypothesis on Chilean data using a binary choice model. Our results reject the DARA hypothesis for the whole sample. However, after splitting the sample into low- and high-income groups, we find that the former have increasing absolute risk aversion (IARA) behavior, whereas the latter have DARA behavior. These findings suggest that policy programs encouraging retirement savings, such as tax breaks and subsidies, should be approached with caution depending on the balance of high and low-income individuals, particularly in less-developed economies.