Risk-taking Attitudes Research Articles

Irrational risk-taking of professionals? The relationship between risk exposures and previous profits

The risk attitude of investors is a key factor determining financial asset prices and market trends. Changes in risk attitude may be due to the interference of macro-level (business cycle) and micro-level (individual experience) effects. We investigate the impact of individual experience on the subsequent risk-taking attitude of professionals via the analysis of the trading activity of 351 non-financial firms and (non-bank) financial institutions (insurance companies, financial intermediaries, etc.) covering 57,039 FX forward transactions in a highly volatile period between January 2008 and November 2012. Panel regressions for all firms and institutions do not show significant behavioral patterns. When investigating each client separately, however, we find that 39.7% of the clients having enough transactions to analyze statistically tend to increase their risk exposure irrationally after large gains or losses which can be the manifestation of the break-even and house-money effects well-documented in the literature for non-professionals. This irrational behavior may destroy value, so both market players and regulators should pay attention to monitor and control it.

Social distancing behavior during COVID-19: a TPB perspective

PurposeIn responding to the Coronavirus (COVID-19) pandemic, drastic public health measures such as social distancing and lockdowns have been implemented across the globe to slow the spread of the virus. In the USA, the public's reaction to social distancing has been mixed, evident in a high number of people flocking to beaches, bars and shops as coronavirus cases soar. Public health officials have issued strong warnings about the danger people face but the problem persists. To fill this gap, informed by the theory of planned behavior (TPB), this research explores why many people refuse to practice social distancing.Design/methodology/approachTwo studies were conducted during the ongoing COVID-19 pandemic. In the first study, a sample of 750 respondents was recruited from a US online consumer panel to complete a structured survey questionnaire. The data were analyzed using confirmatory factor analysis and structural equation modeling. In the second study, an open-ended questionnaire was administered to 50 US online participants to further uncover people's in-depth perceptions and perspectives toward the pandemic and social distancing. Thematic analysis was used to analyze the data.FindingsThe results from the first study show that risk-taking attitude, authoritarianism and subjective norm are significant predictors of social distancing intention and behavior, through perceived severity of COVID-19. Four themes emerged from the second study, which are consistent with the proposed conceptual framework in the first study.Originality/valueTheoretically, the authors’ findings first contribute to the emerging marketing literature that focuses on creating sustained positive changes and improving the well-being of consumers, communities and societies. Secondly, their findings corroborate with previous findings documented in the social influence literature by showing that during the times of uncertainty and confusion such as COVID-19, social norms (not forced by laws and regulations) play the most critical role in influencing a voluntary, socially beneficial behavior (such as social distancing). Third, this study extends the application of the TPB into the realm of social distancing behavior. The three main components of the TPB, namely attitude, behavioral control and subjective norm, are shown to predict social distancing behavior. Practically, the results of this research have important implications for public health policies on how to encourage positive public health behavior amid pandemics such as COVID-19.

Do mistakes acceptance foster innovation? Polish and US cross-country study of tacit knowledge sharing in IT

Purpose This study aims to understand and compare how the mechanism of innovative processes in the information technology (IT) industry – the most innovative industry worldwide – is shaped in Poland and the USA in terms of tacit knowledge awareness and sharing driven by a culture of knowledge and learning, composed of a learning climate and mistake acceptance. Design/methodology/approach Study samples were drawn from the IT industry in Poland (n = 350) and the USA (n = 370) and analyzed using the structural equation modeling method. Findings True learning derives from mistake acceptance. As a result of a risk-taking attitude and critical thinking, the IT industry in the USA is consistently innovation-oriented. Specifically, external innovations are highly correlated with internal innovations. Moreover, a knowledge culture supports a learning culture via a learning climate. A learning climate is an important facilitator for learning from mistakes. Originality/value This study revealed that a high level of mistake acceptance stimulates a risk-taking attitude that offers a high level of tacit knowledge awareness as a result of critical thinking, but critical thinking without readiness to take a risk is useless for tacit knowledge capturing.

Fintech-based Financial Inclusion and Risk-taking of Microfinance Institutions (MFIs): Evidence from Sub-Saharan Africa

Fintech innovations are rapidly transforming the global financial industry and easing the financial inclusion initiatives of microfinance institutions (MFIs). Such technological transformations are expected to promote stability in the financial system and in turn reduce the risk-taking behavior of its main actors. However, there is limited or no empirical evidence to confirm the impact of fintech-based financial inclusion (FinFI) on the risk-taking behavior of Sub-Saharan African MFIs. Thus, we have developed a new index to measure FinFI and empirically assess its role in reducing the risk-taking attitude of MFIs. The validity of our results was confirmed by using various robustness tests.

Awareness of pandemics and the impact of COVID-19

Awareness about the occurrence of viral infectious (or other) tail risks can influence their socioeconomic inter-temporal impacts. In this regard, a branch of the literature finds that personal experiences with significant shocks can have long-lasting effects on risk-taking attitudes and the perceived probability about the occurrence of extreme, negative shocks. In this paper, we proxy the level of societal experience (awareness) in the face of the COVID-19 outbreak by past exposure of a country to epidemics, and other catastrophic events. We show that in a large cross-section of more than 150 countries, more aware societies suffered a less intense impact of the COVID-19 disease, in terms of loss of lives and, to some extent, economic damage.

Analysis of Motivational Factors of MSMEs Entrepreneurs to Be Halalpreneurs

This study aims to examine the motivational factors of Micro, Small and Medium Enterprises (MSMEs) entrepreneurs to become Halalpreneurs based on their religiosity, attitude (awareness of halalentrepreneurship, intrinsic motivation, effort to seek out opportunity, creativity and motivation, honesty and integrity, risk-taking attitude, relative advantage and perceived desirability), subjective norm (family support and peer influence) and perceived behavioral control (perceived feasibility, government support). Data were collected from 239 Muslim entrepreneurs who run their MSMEs. Data were then analyzed using descriptive analysis and partial least square in SmartPLS 3.0. From the result, awareness of halalpreneurship, intrinsic motivation, effort to seek out opportunity, relative advantage, perceived desirability, family support, and perceived feasibility positively are found to influence halalpreneurial propensity significantly. Meanwhile, creativity and innovation, honesty and integrity, perceived governmental support, peers influence, risk-taking attitude, and religiosity are not significant in influencing the MSMEs entrepreneur's halalpreneurial propensity.

What people really change after genetic testing (GT) performed in private labs: results from an Italian study

Despite the widespread diffusion of direct-to-consumer genetic testing (GT), it is still unclear whether people who learn about their genetic susceptibility to a clinical condition change their behaviors, and the psychological factors involved. The aim of the present study is to investigate long-term changes in health-related choices, individual tendencies and risk attitudes in an Italian sample of GT users. In the context of the Mind the Risk study, which investigated a sample of Italian adults who underwent GT in a private laboratory, 99 clients participated in the follow up assessment. They completed a self-administered questionnaire investigating: (a) clinical history and motivation for testing, (b) lifestyle and risk behaviors, (c) individual tendencies toward health, and (d) risk-taking attitude and risk tolerance. Such variables were measured at three different time-points: T0—before GT, T1—at 6 months after genetic results, and T2—at 1 year from results. Results showed that, at baseline, participants who stated they intended to modify their behavior after GT results, effectively did so over time. This result held both for participants who received a positive or negative test result. In general, a healthier diet was the most frequently observed long-term behavioral change. As regards psychological variables, a risk-taking attitude and risk tolerance did not seem to affect the decision to change the lifestyle. Finally, we found an overall reduction in anxiety and worry over health over time, but also a reduction in the motivation for health promotion and prevention, health esteem, and positive expectations for their health in the future.

Family Economic Empowerment, Family Social Support, and Sexual Risk-Taking Behaviors Among Adolescents Living With HIV in Uganda: The Suubi+Adherence Study

PurposeThis study examined the effect of a family economic empowerment (EE) intervention and family support on sexual risk-taking behaviors among adolescents living with HIV in rural Uganda. MethodsWe used data from the Suubi + Adherence study, a longitudinal cluster randomized clinical trial of 702 adolescents living with HIV aged 10–16 years. Participants were randomly assigned to either the control arm (n = 358) receiving bolstered standard of care or a treatment arm (n = 344) receiving bolstered standard of care plus the family EE intervention. We used mixed-effects models to examine the effect of the EE intervention and family support on sexual risk-taking behaviors at the baseline, 12 months, and 24 months after intervention initiation. ResultsAdolescents in both the intervention and control groups did not differ significantly in their sexual risk-taking attitudes at the baseline and over the 24-month follow-up period. Higher levels of caregiver social support were significantly associated with a decrease in attitudes toward sexual risk-taking (ß = −.40, 95%CI = −.51, −.29). More frequent parent-child communication was significantly associated with increased negative sexual risk-taking attitudes (ß = .21, 95%CI = .16, .26). ConclusionsAlthough we find no direct relationship between family EE and attitudes related to sexual risk-taking behaviors, we find that a supportive family environment can promote positive attitudes related to sexual risk-taking behaviors. The effectiveness of sexual risk reduction interventions would be enhanced by engaging families and strengthening supportive relationships between adolescents and their caregivers.

Credit card payments: do cultural values matter? Evidence from the European Union

PurposeThis study analyzes how cultural and social values shape specific attitudes toward credit cards and indebtedness and consumption behavior.Design/methodology/approachThe study uses a panel dataset for a selection of European Union countries from 2003 to 2016. The relation between credit card use and social and cultural attitudes is constructed by controlling for past habits in payment behavior and cross-substitution with alternative payment instruments by employing a dynamic panel data analysis based on the system Generalized Method of Moments (GMM) estimator.FindingsThe total value of credit card payments positively correlated with values emphasizing risk-taking attitudes. When analyzing the propensity of using these instruments for larger purchases, the level of trust is the most relevant predictor. However, the results seemed region-specific with some variables correlating consumption behavior with credit card usage depending on the political and the economic background of the country. Moreover, risk-taking attitudes prevail when they are related to the extent to which countries rely on cash as a preferred payment instrument. Also, credit card usage is mainly explained by past habits and the economic context.Originality/valueThe model expands on previous credit card transaction research by including an additional set of cultural values able to account for the complex nature of payment instruments and their effects on indebtedness and consumption behavior.

Risk-taking of bank CEOs and corporate innovation

We find that banks with CEOs who postpone exercising deep in-the-money options are more likely to lend to firms that are smaller, riskier, and more engaged in corporate innovation. These borrowers also spend more on R&D than a matched sample after getting the loans. Subsequently, these borrowers have higher innovation outputs and achieve greater market valuations. Overall, our findings suggest that the bank CEOs who reveal a high risk-taking attitude by their option exercising behavior help facilitate technological progress via the syndicate loans.

Identifying the \u201cActive Ingredients\u201d of a School-Based, Workplace Safety and Health Training Intervention

Young workers in many industrialized countries experience a higher rate of largely preventable occupation-related injuries compared with adults. Safety education and training are considered critical to the prevention of these incidents. This can be promoted by the dissemination and scale-out of an evidence-based, safety training programs in vocational education. The aim of this study was to identify the intervention core components that comprise the “active ingredients” of a safety training intervention for young workers and assess the impact on student outcomes of interest. Fidelity of implementation was operationalized using measures of adherence and quality of intervention delivery. For this study, data were collected through a school-based, cluster randomized trial conducted in 2015 in eight Finnish upper secondary-level vocational schools (n = 229 students in 22 groups, each with one teacher). Results indicate that the intervention core components (safety skills training, safety inoculation training, a positive atmosphere for safety learning, and active learning techniques) had differing associations with student outcomes. Adherence related to the acquisition of safety skills training was the strongest active ingredient in terms of positive effects. Furthermore, quality of delivery in terms of fostering positive learning atmosphere and utilizing active learning methods was associated especially with motivational outcomes. These findings indicate that different active ingredients complemented each other. Contrary to expectations, we found no statistically significant relationship between any of the core components and risk-taking attitudes. The current study advances prevention science by identifying the active ingredients of an evidence-based intervention, implemented in Finnish vocational school settings, that helps protect young workers from work-related morbidity and mortality.

E-Mail Network Patterns and Body Language Predict Risk-Taking Attitude

As the Enron scandal and Bernie Madoff’s pyramid scheme have shown, individuals’ attitude towards ethical risks can have a huge impact on society at large. In this paper, we compare risk-taking attitudes assessed with the Domain-Specific Risk-Taking (DOSPERT) survey with individual e-mail networking patterns and body language measured with smartwatches. We find that e-mail communication signals such as network structure and dynamics, and content features as well as real-world behavioral signals measured through a smartwatch such as heart rate, acceleration, and mood state demonstrate a strong correlation with the individuals’ risk-preference in the different domains of the DOSPERT survey. For instance, we found that people with higher degree centrality in the e-mail network show higher likelihood to take social risks, while using language expressing a “you live only once” attitude indicates lower willingness to take risks in some domains. Our results show that analyzing the human interaction in organizational networks provides valuable information for decision makers and managers to support an increase in ethical behavior of the organization’s members.

The Investment Style Drift Puzzle and Risk-Taking in Venture Capital

Limited partners allocate capital into venture capital funds with the expectation of a risk-return profile matching the fund's investment style in terms of startup investment stage, location and industry. This paper draws a connection between style drifts in these three dimensions and the connected risk-taking attitude of the general partner. By analyzing a sample of 31,521 investments with respect to the motivation for style drifts, this paper seeks to answer whether style drifts are deliberate risk-shifts or happen out of competitive pressure. The results suggest that venture capitalists increase risk, when they have strong past performance and public markets are bullish in order to make the most of the balance of compensation and employment incentives. This balancing most likely constitutes an agency conflict between limited partners and general partners. Further, results show that most risky style drifts have a negative impact on the probability of a successful exit even after controlling for performance persistence and endogeneity. Finally, the findings show that aggregate style drift has a negative effect on a fund's performance measured as its exit rate.

The prospects of Bahrain’s entrepreneurial ecosystem: an exploratory approach

Having a positive environment and enforcement in a social-political economy is necessary to poster an effective entrepreneurial climate. The passion for self-startups and risk-taking attitude are entrepreneurs’ traits with effective motivations, innovation, creativity, persistence, and flexibility. This helps the entrepreneur succeed and excel in their business. The success of a new project adventure is a crucial matter in business and investment. The literature review revision allows detecting the most attractive factors, the main reasons for startup failure, and the challenges facing entrepreneurs and new projects. This review paper enlightens Bahrain’s entrepreneurship ecosystem’s attractiveness and argues how the economy in the Kingdom of Bahrain encourages startup companies to establish and develop their business. The analysis results illustrate that the Government of Bahrain’s support system with effective public institutions and encouraging society are significant factors contributing to the success of the startup project. Nourishment extended by the government institutions and other supportive organizations like Tamkeen, Injaz, and EDB simplifies the formation of startup projects and support their sustainable growth. Analyzing the most common reasons for startup failure, the paper presents the proposed solutions to avoid these traps. It suggests the appropriate bodies in the entrepreneurship ecosystem, supporting and helping entrepreneurs overcome these difficulties.

NOSACQ-50 for Safety Climate Assessment in Agricultural Activities: A Case Study in Central Italy.

Safety climate assessment has been recognized as a powerful tool to bring to light workers’ perceptions related to safety practices, attitudes and behaviors at the workplace. Accordingly, its investigation can provide useful information about safety problems within a company before accidents occur. In literature, numerous studies can be found investigating safety climates in different types of industry. However, safety climate assessment in agricultural activities is addressed scarcely, even though agriculture represents a very hazardous sector. To reduce this gap, the present study proposes an investigation of safety climate among farmers by means of the Nordic Safety Climate Questionnaire (NOSACQ-50). The results of the survey brought to light a low level of safety perception of the interviewed sample, especially as concerns safety commitment and risk-taking attitudes. In particular, a different attitude toward safety issues has been registered depending on both the position and gender of the interviewed farmers. Overall, the output of this cross-sectional analysis adds to the current literature by expanding knowledge of safety climate among farmers, representing a baseline for further investigations based on human-centered approaches to enhance safety in agriculture and consequently social and workplace aspects of sustainable agricultural systems.

Risk attitudes and human mobility during the COVID-19 pandemic

Behavioural responses to pandemics are less shaped by actual mortality or hospitalisation risks than they are by risk attitudes. We explore human mobility patterns as a measure of behavioural responses during the COVID-19 pandemic. Our results indicate that risk-taking attitudes are a critical factor in predicting reductions in human mobility and social confinement around the globe. We find that the sharp decline in mobility after the WHO (World Health Organization) declared COVID-19 to be a pandemic can be attributed to risk attitudes. Our results suggest that regions with risk-averse attitudes are more likely to adjust their behavioural activity in response to the declaration of a pandemic even before official government lockdowns. Further understanding of the basis of responses to epidemics, e.g., precautionary behaviour, will help improve the containment of the spread of the virus.

The development of safe riding guidelines for young riders – A case study of Phu Yen, Vietnam

Phu Yen is a small province located in the central part of Vietnam and is suffering from a tremendous number of traffic casualties, compared with other cities in Vietnam and developed countries. Young riders take a large proportion, accounting for 47.6% in total traffic crashes. To resolve this issue, the present study aims to (i) analyze young riders' behavior and their attitudes towards traffic safety and to (ii) propose a procedure to develop a book of safe riding guidelines to reduce their involvement in dangerous situations. A set of 73 questions in the questionnaire survey have been conducted to determine the risk-taking behavior and attitude towards traffic safety of 300 individuals, who are using bicycles, e-bikes, mopeds, scooters, and motorcycles less than 150 cc. The statistical results indicate that there are significant differences among riding behavior and attitudes of respondents towards traffic safety regarding the regional factor (rural, suburb, and urban), the demographic factor (gender and age), and the travel distance factor. The guidelines designed based on the questionnaire survey are used to alter adolescents' riding behavior and attitudes and so help them recognize, avoid, and handle risks in demanding traffic situations. An analysis of the before and after the traffic safety training workshop to evaluate the effectiveness of the proposed guidelines indicated that there was a significant increment in the perceived risks of young riders after training them by using this book.

A multi-objective robust possibilistic programming approach to sustainable public transportation network design

As a critical component of sustainable development, a transportation system should be designed such that it has a positive impact on the economic, environmental, and social sustainability of the served region. In response, this study introduces the concept of passenger dissatisfaction with additional walking and waiting as an indicator of social sustainability and uses the concept while optimizing the transit network for economic, environmental, and social perfectives. Due to a lack of knowledge about the actual value of different passenger dissatisfaction levels and uncertainty in demand, a multi-objective robust possibilistic programming approach (RPP⁎) is proposed and solved by using an interactive fuzzy programming approach. Different from other robust possibilistic approaches, RPP⁎ optimizes not only the mean of the objective function and chance constraint violations but also the risk value inherited by uncertain parameters through considering the absolute deviation of the objective function. Both the advantage of RPP⁎ versus the deterministic model and its superiority against several robust possibilistic approaches are demonstrated in the numerical studies. Furthermore, the outcomes of the numerical study demonstrate that the transportation network should be designed in a decentralized way as the risk coefficients, i.e., risk-taking attitude, increase.

Flood Risk and Its Effect on Property Value in Kuala Krai, Kelantan

The effect of flood risk on property value is vital because property is the most asset coveted by people for ownership. The attraction to live in a location induces people to give less priority to environmental threat such as flood. This study investigates whether the value of the properties was affected by flood risk by taking Kuala Krai, Kelantan, as a case study. By combining spatial analysis, Geographic Information System mapping and statistical analysis, this study included flood risk as one of the tested variables to determine whether it has affected property value. The statistical methods used were the Ordinary Least Squares regression model (OLS) and Geographically Weighted Regression (GWR). Market prices of a total of 811 transacted properties in the district of Kuala Krai were used to generate statistical model and property maps. The ArcGIS software was used to display and store modeled flood in the study area. The findings showed that higher property values were found around urban centers such as Kuala Krai, Dabong, and Manik Urai, although these areas were among the areas with deep flood inundation. The study disclosed that despite living in areas exposed to flood, the value of property was unaffected. On the other hand, the strategic location in the population concentration area has made it a more important factor than flood risk in determining the impact on property value. Furthermore, people’s receptiveness, adaptability, and risk-taking attitudes were likely to have caused flood to have failed to dislodge the population from flood-prone areas. Another possibility was that flood-prone areas were important economic activity zones so much so that people were more interested to live and work there rather than responding to flood risk.

An investigation of Driver Attitudes Towards Road Safety in Oman

The Summary: Nowadays, road safety and associated behaviors received a lot of attention. Road Traffic Accident (RTA) is a combination of many factors comprising roads designs, vehicle and environmental conditions and human behavior. Human behavior is the most prevalent contributing factor for road traffic accidents. This study aims to identify accident risk factors associated with driving behaviors among the drivers in Oman and its risk perception. The study comprised the use of both qualitative and quantitative methods. The qualitative method included interviews with focus group from the Ministry of Transportation in Oman. The quantitative approach included analysis of road traffic accidents in Oman, followed by a survey questionnaire distributed to a random selection drivers in Oman. Both qualitative and quantitative data were analyzed using constant comparative and statistical techniques. The results showed that gender, age, and experience have significant influence on attitude towards the commission of traffic violations and risk behavior. The young and male drivers were found to be significantly more involved in road accidents, and the 26-33 years age group and those with minimal driving experience of 1-5 years constitute the risk-taking attitudes group. The results of this study will be of interest to the local community and transport planning in the Sultanate of Oman and it will help reduce traffic accidents and improve driver behavior.