Risk-averse Behavior Research Articles

Exploring the dark side of integrity: impact of CEO integrity on firms’ innovativeness, risk-taking and proactiveness

PurposeThis study aims to examine the effect of chief executive officer (CEO) integrity on organizations’ strategic orientation. The authors propose that CEOs who have high degrees of integrity tend to negatively influence each of the three core dimensions of entrepreneurial orientation (EO) – innovativeness, proactiveness and risk-taking. They also argue that this impact of CEO integrity is likely to be stronger for overconfident CEOs and the CEOs with high power. Furthermore, this negative relationship is expected to attenuate when the firm has high customer orientation and when the CEO is compensated with high equity-pay ratio.Design/methodology/approachSeemingly unrelated regression analysis was conducted on panel of 741 firm-year observations of 213 firms across 2014–2017. CEO integrity and each of the three dimensions of EO were measured using content analysis of CEOs’ letters to shareholders. CEO power was measured using CEO stock ownership and CEO duality. CEO overconfidence was measured by using options-based measure. Customer orientation was measured by using content analyses on annual reports. CEO equity-pay based ratio was measured as sum of value of stock and option awards divided by CEO’s total compensation. This study considered alternative measures and performed treatments for potential endogeneity, sample selection bias and outliers.FindingsThe research findings conclude that organizations with CEOs who have high integrity tend to have lower levels of all sub-dimensions of EO – innovativeness, proactiveness and risk-taking. Further, the results indicate that the negative effect that CEO integrity has, affects one of its dimensions – proactiveness, such that the relation is strengthened when the CEO has high power and is highly overconfident. This negative effect weakens when the CEO is compensated with high equity-pay ratio. The results also indicate that the negative effect of integrity and innovativeness and risk-taking weakens when the firm has high customer orientation.Research limitations/implicationsThe research contributes to upper echelon theory literature by adding to the discussion of how business executives’ psychological traits map onto firm behavior. This research also finds common ground between literature on innovation and upper echelons, contributing to awareness about the drivers of firms’ EO.Practical implicationsThis research addresses the question of firm relation to EO by highlighting that firms’ EO is also shaped by the psychological traits of their CEOs and the interaction of these traits with CEOs’ cognitive biases. Thus, board members of firms led by CEOs with high integrity can limit CEO’s risk-averse behavior by focusing on their training and by creating incentive systems. It is also advantageous for CEOs to understand that integrity is a double-edged sword, thus leveraging the strengths of their integrity, while simultaneously using tools such as training to diminish its negative aspects.Originality/valueThis paper fulfils a twofold identified need to: study the antecedents of each of the three dimensions of EO, not limited to corporate governance; and unearth the counterproductive behaviors associated with bright traits that make up their dark side

Risk aversion and labor behavior determination factors on insurance products

Purpose—The purpose of this article is to try to look at the risk aversion determination factors that encourage the behavior of the educated workforce using or not using insurance products. The indicators used are income, education level, number of Dependents, Gender, employment status, place of residence, generation group, insurance product information
 Method—The analysis model used is probit regression. Primary data obtained through a survey of 111 respondents and only 93 educated workers in Aceh Province met the specifications and filled in completely.
 Research Results—The results show that only employment status has a positive and significant effect on labor preferences for insurance products, while other factors are not significant.
 Limitations — This research is still limited in samples, factors that are used as objects of research and less in-depth about the role of information affecting people's behavior. This is a suggestion for researchers to further conduct more comprehensive research.
 Practical Implications—The results of this study can be used as a reference for the government and companies must synergize with each other in planning insurance programs. High-income workers are expected to join insurance programs, mutual care is an important social capital to maintain the economy. The government or insurance company must increase the socialization of information on the importance of insurance programs to deal with the uncertainty of future risks.

Adherence and perception of the importance of anti-COVID-19 protective measures amongst patients with cancer.

e24120 Background: Patients (pts) with cancer are at a higher risk of COVID-19 (C19) severe disease. However, our group and others have demonstrated a low prevalence of C19 infection among asymptomatic pts with cancer on active systemic treatment. We hypothesized this phenomenon was due to increased adherence of pts with cancer to anti-C19 protective measures. This study compares adherence and the perceived importance of such measures in oncologic and non-oncologic populations. Methods: This is a cross-sectional study conducted between June and September 2021. A questionnaire was developed to assess how participants perceived and adhered to masking, handwashing, and other anti-C19 protective measures. Demographic information, educational level, and monthly income were also collected. Three groups were included: A) pts with cancer treated at Hospital de Base (HB); B) pts without cancer treated at HB for other medical conditions; C) a healthy outpatient population. Data were summarized in means, medians, and proportions. Chi-squared or Fisher´s exact test was used to compare categories; ANOVA was employed to compare means. A multivariable analysis assessing factors associated with adherence to anti-C19 protective measures was performed. Results: A total of 607 people were interrogated (200 in groups A and B, and 207 in C). The mean age of groups A, B, C was significantly different: 60 vs. 52 vs. 35 years old (p < 0.001). Group C had a higher educational level and a higher monthly income than groups A and B (p < 0.001). In cohort A, gastrointestinal, breast, and genitourinary were the most frequent tumors (33%, 31%, 15%); 75% of pts had active disease. Pts with cancer were more adherent to anti-C19 protective measures: of 33 points, the mean score of groups A, B, C was respectively 27.8 vs. 25.5 vs. 21.9 (p < 0.001). Regarding the importance of anti-C19 protective measures, pts with cancer also perceived those as more relevant: of 21 points, the mean score of groups A, B, C was respectively 17.8 vs. 17 vs. 16.9 (p < 0.001). For instance, in group A, 95% report consistently wearing a mask when leaving home compared to 90% and 58.2% of groups B and C. In line with our findings, 20.5% vs. 32.5% vs. 35.3% (p < 0.003) of groups A, B, and C reported having C19 before the questionnaire. In multivariable analysis, groups B and C were less likely to adhere to anti-C19 protective measures than group A. Conclusions: Pts with cancer are more adherent to anti-C19 protective measures and perceive them as more important than non-oncologic populations. Our results shed light on the accumulating literature of a low incidence of C19 amongst asymptomatic pts with cancer on systemic treatment even during the surges. Such findings are possibly related to the fact that cancer pts are more vulnerable to hospitalizations and unfavorable outcomes than the general population, prompting a more risk-averse behavior.

Cyber-security and risky behaviors in a developing country context: a Pakistani perspective

Cyber-security behavior research is scant with even scarce studies carried out in developing countries. We examine the cyber-security and risky Internet behaviors of undergraduate students from Pakistan, taking into account the diversity of these students in terms of demographics, socioeconomic status, and the digital divide. Data were collected using a survey questionnaire. A total of 294 students belonging to six different cities of Pakistan were surveyed employing multistage stratified sampling in face-to-face interaction. The results indicated significant differences of cyber-security posture in terms of gender, age and digital divide variables. The profiles of students based on cyber-security and risky Internet behaviors indicate three groups with a majority of them falling into group that exhibits more risk-averse yet low cyber-security behavior. Moreover, proactive cyber-security awareness behavior has a positive impact on high risk-averse behavior. The implications of the findings are studied in terms of providing customized training and awareness. The future directions are laid out for further explorations in terms of cultural differences within and cross-country contexts.

A novel behavioral three-way decision model with application to the treatment of mild symptoms of COVID-19

The Coronavirus Disease 2019 (COVID-19) has popularized since late December 2019. In present, it is still highly transmissible and has severe impact on the public health and global economy. Due to the lack of specific drug and the appearance of different variants, the selection of the antiviral therapy to treat the patients with mild symptom is of vital importance. Hence, in this paper, we propose a novel behavioral Three-Way Decision (3WD) model and apply it to the medicine selection decision. First, a new relative utility function is constructed by considering the risk-aversion behavior and regret-aversion behavior of human beings. Second, based on the relative utility function, some new rules are defined to calculate the thresholds and conditional probabilities in 3WD and some corresponding theorems are explored and proved. Next, a new information fusion mechanism in the framework of evidential reasoning algorithm is developed. Then, the decision results are obtained based on the Bayesian decision procedure and the principle of maximum utility. Finally, an example with large-scale data set and an example about medicine selection for COVID-19 are provided to show the implementation process and effectiveness of the proposed method. Comparative analysis and sensitivity analysis are also performed to illustrate the superiority and the robustness of the current proposal.

A novel fuzzy framework for technology selection of sustainable wastewater treatment plants based on TODIM methodology in developing urban areas

Optimal technology selection of wastewater treatment plants (WWTPs) necessitates the adoption of data-driven scientific approaches that satisfy the sustainability requirements of the urban ecosystem. Such approaches should be able to provide actionable insights to decision makers constrained by factors such as population growth, land scarcity, and loss of functionality of wastewater treatment plants. The framework in this study proposes a hybrid fuzzy multi-criteria decision making (MCDM) model consisting of the analytical hierarchy process (AHP) and the TODIM (an acronym in Portuguese of interactive and multi-criteria decision-making) by using alpha cut series which takes into account the risk aversion of decision makers (DMs) to overcome uncertainties of environmental conditions. The literature to date indicates that the study is the first to presents how a systematic decision-making process is approached by interpreting the interaction of criteria for the selection of wastewater treatment technology through the membership function of Prospect Theory. The proposed methodology reveals that the prominent reference criterion manipulates other sub-criteria according to the function of risk-aversion behavior. The fuzzy sets based on alpha cut series are employed to evaluate both the criteria weight and the rank of the alternatives in the decision-making process to obtain compromise solutions under uncertainty. The dominance degrees of the alternatives are achieved by fuzzy TODIM integrated with the fuzzy analytic hierarchy process (FAHP) which deals with the uncertainty of human judgements. According to the ranking results determined by the dominance degree of alternatives, anaerobic–anoxic–oxic (A2O) without pre-clarification was the most effective process in relation to the sludge disposal cost (C25) calculated as reference criteria. The ranking of four full-scale WWTPs in a metropolitan city of an EMEA country based on 24 sub-criteria listed under the four main criteria, namely the dimensions of sustainability, is used as a case study to verify the usefulness of the fuzzy approach. Motivated by the literature gap related to the failure to consider the psychological behavior of DMs in technology selection problem for wastewater treatment, it is discussed how the proposed hybrid MCDM model can be utilized by reflecting human risk perception in wastewater treatment technology selection for developing urban areas.

FINANCIAL LITERACY AND MENTAL ACCOUNTING ANALYSIS OF FINANCIAL DECISIONS AND SHOPPING INTERESTS IN THE COVID-19 PANDEMIC ERA

The Covid 19 pandemic is a situation that illustrates the uncertainty of economic conditions nationally and globally and has an impact on how individuals should react to it in financial terms. Therefore, this study aims to examine the effect of financial literacy and mental accounting on financial decisions and spending interests in the COVID-19 pandemic situation based on prospect theory and behavioural life-cycle theory. The results of research on lecturers and staff respondents at STIE Equity Bandung - Indonesia, the SEM-PLS analysis results show that financial literacy and mental accounting have an effect on financial decisions, and only mental accounting has an effect on shopping interest. In terms of prospect theory, the research findings found that in pandemic situations, individuals generally behave in risk-aversion behaviour. Meanwhile, in the viewpoint of the behavioural life-cycle theory, individuals view money as current assets with precautionary reasons.

Comparative analysis of risk-aversion and strategic investment behavior in generation expansion

Both risk-averse behavior and strategic bidding may distort the outcome of energy and capacity markets. Although these two behavioral aspects may trigger similar bidding behavior and investments into generation capacity, they are fundamentally different.While in the literature risk-aversion and strategic behavior have been investigated separately, the presented research offers a comparative analysis to identify situations in which both types of behavior result in the same outcome. First, a framework is introduced in which both strategic and risk-averse behavior can be investigated for a generation expansion planning problem. The problem including the risk-averse investor is modeled as a Nash-equilibrium problem and solved via Alternating Direction Method of Multipliers, whereas the Stackelberg game between the strategic agent and the markets is formulated as a bi-level optimization problem and solved using disjunctive constraints.Using a set of 1920 problem instances we reveal that the distinguishability of the two types of behavior is highly technology-dependent and influenced by the way the capacity target is set. Implications of this work may support regulators in disentangling risk-aversion and strategic behavior based on observed market outcomes.

Risk perception of earthquakes: Modeling conception of willingness to pay and prospect theory

Natural disasters have greatly threatened people's lives and properties. In recent years, disaster management has become a key issue for the sustainable development of a society. In this regard, understanding how people perceive disasters is needed to formulate better disaster management strategies and enhance the resilience of the society. This research seeks to study risk perception and relevant attitudes, which are the fundamental factors of human behavior under the threat of disaster impact. A stated preference survey is conducted to investigate people's willingness to pay for earthquake risk reduction, where the effect of information is also the concern and incorporated in survey design. Thereupon, a multiple-bounded dichotomous choice model and an ordered probit model are estimated to quantify risk attitudes toward earthquakes as the monetary value. Results suggest that factors, such as higher socioeconomic status, more family members, and the residence aged above 40 years old, have positive effects on risk perception. In addition, presenting previous earthquake disaster damage information may increase individuals' risk perception. The prospect theory is employed in the study to establish a theoretical model to capture people's risk-seeking and/or risk-averse behavior, thereby more sophisticatedly reflecting the behavioral realism related to disaster preparedness. Based on the improved understanding of risk perception and relevant attitudes, the associated authorities may be able to develop solid resilience-enhancement programs and more effectively strengthen disaster response efficiency, thereby minimizing the damages and injuries caused by earthquakes.

Adaptation to climate change risks among dairy farmers in Punjab, Pakistan

Adaptation to climate change is a complex process and requires sound understanding of how climatic changes are perceived and interpreted at local level by dairy farmers. This study is therefore designed to investigate the climatic risk perception, risk attitude, determinants of adaptation measures/strategies and constraints faced by the dairy farmers. The present study is among the pioneering studies considering dairy sector in developing countries in general and Pakistan in particular. A well-structured questionnaire was used to interview 450 dairy households from three agro-ecological zones of Punjab province of Pakistan. The study employed binary logit models to determine the influence of climate risk perception, risk attitude and other factors on adaptation decision of farmers. The findings of study revealed that climatic risk perception and risk tolerant nature of farmers positively influenced the use of adaptation measures such as selling of weak/diseased animals, migration, off-farm income activities and changes in cropping pattern, while risk averse behavior had negative impact on adaptation decisions. Among other determinants, education, farming experience, number of dairy animals, access to extension/veterinary officer and access to credit facilities has positive and significant influence on adaptation to climate change. Study also identified major constraints (socio-psychological, economic, technical, infrastructural/institutional and communicational) preventing dairy farmers to adopt adaptation measures against climatic risks. The study posits important policy measures.

Climate risk disclosure and climate risk management in UK asset managers

PurposeFramed within global policy debates over the need for private financial flows to align with the capital requirements of the Paris Agreement, this paper examines UK asset managers in their approaches to disclosing and managing climate risk. This paper identifies and evaluates climate risk management practices among this under-researched investor group in their capacity to address fundamental behavioural obstacles to low-carbon investment.Design/methodology/approachThis paper takes an inductive approach to document analysis, applying content and thematic analysis to the annual disclosures of the 28 largest UK asset managers (by assets under management), including the investment management arms of insurance and pension companies.FindingsThe main takeaway from this research is that today’s climate risk management strategies hold potential to effectively address traditionally climate risk-averse investor behaviour and investment processes in the UK asset management context. However, this research finds that the use of environmental, social and governance (ESG) investment strategies to mitigate climate risks is a “grey area” in which climate risk management practices are undefined within broad sustainability and responsible investment agendas. In doing so, this paper invites further research into the extent to which climate risks are considered in ESG investment.Originality/valueThis paper contributes to research in sustainable finance and behavioural finance, by identifying the latest climate risk management techniques used among UK-headquartered asset managers and uniquely evaluating these in their capacity to address barriers to low-carbon investment arising from organisational behaviours and processes.

Hybrid robust and stochastic optimization for a capital-constrained fresh product supply chain integrating risk-aversion behavior and financial strategies

A fresh product supply chain is considered in which an omnichannel retailer procures products from multiple suppliers and distributes them through a distribution center to physical stores to serve both online and offline customers. A two-stage stochastic optimization model is formulated for the strategic and operational decisions of the omnichannel retailer incorporating the decision maker’s risk aversion behavior and financial flow into supply chain optimization. In the model, the amount of capital possessed by the retailer is treated as a hard constraint, and trade credit and bank loans are both considered as financial sources. After linearization, the two-stage stochastic optimization model is transformed into a mixed integer linear programming model. A hybrid robust and stochastic optimization approach is developed to simultaneously cope with two different types of uncertainties in the supply chain by including stochastic scenarios for transportation costs and using “interval + polyhedral” uncertainty sets for demands and deterioration rate. The robust counterpart of the mixed integer linear programming model is constructed. An improved sample average approximation method using the k-means clustering technique is adopted to solve the problem. The applicability of the proposed model and the efficiency of the solution approach are investigated through numerical studies. Some important managerial insights are provided through the model, the solution approach and the numerical studies.

Risk-taking coping style correlates with SERT SNP290 polymorphisms in free-living great tits.

The coping style of an individual in relation to potentially dangerous situations has been suggested to be inherited in a polygenic fashion, SERT being one of the candidate genes. In this study, we assessed in free-living great tits (Parus major) the association between SNP290 in the SERT promoter and three standard fear-related behaviors: the response of the birds to a black-and-white flag fixed to the top of the nest box, distress calling rate of the birds in the hand once captured and the hissing call of incubating females when approached by a predator. We found a strong association between SNP290 polymorphism and the three risk-taking behaviors, with birds with genotype CT entering the nest box with the flag faster and displaying more distress calls and fewer hissing calls. CT birds could therefore be described as more proactive than CC individuals. These results also suggest that hissing behavior should be regarded as a fear-induced shy behavior, and confirm that SERT has an important function in relation to risk aversion behaviors and coping style.

Risk Aversion, Organ Utilization and Changing Behavior.

Improving organ acceptance and utilization rates is critical to ensure we maximize usage of donated organs as a scarce resource. Many factors underlie unnecessary discard of viable organs. Declined transplantation opportunities for candidates is associated with increased wait-list mortality. Technological advancements in organ preservation may help bridge the gap between donation and utilization, but an overlooked obstacle is the practice of risk aversion by transplant professionals when decision-making under risk. Lessons from behavioral economics, where experimental work has outlined the impact of loss or risk aversion on decision-making, have not been translated to transplantation. Many external factors can influence decision-making when accepting or utilizing organs, which are potentially amendable if external conditions are improved. However, attitudes and perceptions to risk for transplant professionals can pervade decision-making and influence behaviour. If we wish to change this behavior, then the underlying nature of decision-making under risk when accepting or utilizing organs must be studied to facilitate the design of targeted behavior change interventions to convert risk aversion to risk tolerance. To ensure optimal use of donated organs, we need more research into decision-making under risk.

Pentingkah Perilaku Wanita? Studi Kebijakan Dividen

Board diversity in the corporate governance function have multiple perspectives and active oversight in evaluating management decisions and through their influence on dividend policy. Therefore, this study examines the effect of female boards on the dividend payout ratio and dividend yield in a sample of companies in the IDX HIDIV20 and IDX BUMN20 for the period 2017-2020. The results showed that the percentage of female directors, female independent directors, female executive directors, and the numerical number of female directors had a significant positive effect on the dividend payout ratio. Women's associations and dividend policy have a stronger relationship when women on the board of directors have a high percentage. A certain number of women's councils were judged to be better and more effective in decision-making. While the female CEO as a leader because of risk-averse behavior, low self-confidence, weak decisions, and lack of control on the board, affect the value of the company including influencing dividend payments inversely. The results of this study provide strong evidence plus difference test and robustness test confirming that female boards facilitate corporate governance and promote dividend payouts further.

Generalizing the Sharpe Ratio and Infinite Divisibility in Financial Markets

Investments with high Sharpe ratios tend to be fixed income investments, particularly short-term bonds. Such securities dominate income investment, but not growth investment. We generalize the Sharpe ratio to interpolate smoothly between risk-averse and risk-seeking behaviors, with the traditional Sharpe ratio as a special case. The generalized ratios may be used to optimize portfolios within a lifestyle strategy or a lifecycle strategy. We demonstrate that the Sharpe ratio has an interpretation connected to value at risk (VaR), if returns are normally distributed. We study broad market indices and indicators for US stocks, US corporate bonds, gold, and Japanese stocks. Using monthly data obtained from FRED, we show that these datasets are neither normal, nor log-normal, nor stable. We argue that none of these distributions is appropriate for market data. We argue instead for using infinitely divisible distributions, and fit Pearson distributions to the data.

Analysis on Risk Avoidance Behaviors and Influential Factors of Epidemic Disease among Pig Farmers

Abstract The initial outbreak, high mortality and wide range of influence of African swine fever in China have an impact on the stable development of China’s pig market price and industry. Choosing the correct risk aversion behavior of pig farmers is the only way to promote the development of modern pig breeding industry and protect people’s livelihood. Studying the epidemic risk aversion behavior of pig farmers and its influencing factors is conducive to enhance the ability of farmers to resist risks and improve the efficiency and production level of pig breeding. Taking pig farmers in three northeastern provinces as the survey object, this paper analyzes the willingness of pig farmers to take epidemic prevention and control measures by using multivariate ordered logistic and multiple logistic models, and discusses the main factors affecting the epidemic risk avoidance behavior of pig farmers. The study found that factors such as pig breeding scale, understanding of pig insurance and epidemic prevention and control knowledge, risk preference and so on can significantly affect the willingness of pig farmers to take epidemic prevention and control measures. Education, specialization and breeding prospect judgment can significantly affect the choice of epidemic risk aversion behavior of pig farmers.

Financing the future of WHO

Financing the future of WHO

Work from home amenability and venture capital financing during COVID-19

ABSTRACT This paper examines the impact of COVID-19 on venture capital financing of firms. We find a significant shift in the profile of firms that obtain venture capital financing during the pandemic-induced economic crisis. Firms in industries that are more amenable to work from home obtain greater amounts of financing. Growth-stage firms operating in amenable industries are able to obtain higher financing than early-stage firms. The higher financing obtained by firms in amenable industries is driven by venture capital funds focused on the domestic market. Additionally, the higher financing is obtained from a single venture capital investor rather than a consortia of investors. Taken together, the preference of venture capital funds indicate a less risk-averse behavior in financing firms amenable to remote working. The findings of our study using monthly firm-level data provide insights on venture capital financing during the pandemic.

Characterizing Risk Behaviour of Maize Farmers using the Experimental Gambling Approach: An Empirical Study in Ghana

<p>Along the maize value chain in Ghana are a wide range of risks that confront actors; the risk chain actors' face include production and marketing risks. Accordingly, risk management, which has become an integral part of maize value chain activities, is challenged with several factors, some of which are economic, institutional, social and behavioral factors. This study posits that risk preferences/behavior of farm decision-makers in the maize value chain have empirical importance for economic and policy analysis. Thus, an experimental gambling approach was used to elicit the risk aversion behavior of respondents (farmers). Here, the respondents' risk aversion behavior over varying game levels was investigated. The multinomial logit model was used to investigate endogenous and exogenous factors explaining the risk behavior. The data were obtained by interviewing 220 maize farmers who were sampled with a two-stage sampling procedure. This study revealed that most of the farmers in the study area exhibited risk aversion behavior. About 33% of farmers showed extreme risk aversion behavior at the games’ lowest level and increased to 45% as the game level rose. It was also found that sex, age, level of formal education, access to credit, access to the storage facility, household size, farm size and the number of extension visits to the farm significantly explained the risk aversion behavior the maize farmers exhibited. Because farmers are risk-averse and become more risk-averse as stakes become high, any farm innovations to be introduced to them must be implemented gradually, especially with the low-income farmers. It is also critical to make risk mitigation 'handles' available to farmers so that they can rely on them during times of risk.</p>