Risk Attitudes Research Articles

External corporate venturing in family firms: a behavioural perspective

ABSTRACT The purpose of this study is to investigate the proclivity of family businesses to engage in external corporate venturing, specifically investments targeted at exploratory searches in ventures in their early stages of development. From a behavioural perspective, we investigated whether family control influences the likelihood of engaging in such risky initiatives and to what extent key organizational contingencies, i.e. financial slack and risk-taking endeavours, shift socioemotional wealth preservation as a reference point. We tested our hypotheses on a sample of 12,320 firm-year observations gathered from 2,548 European listed firms in the period 2011–2018. We found that despite family firms engaging less than nonfamily firms in external corporate venturing, their risk attitudes change under both extremely favourable and uncertain organizational contingencies.

Understanding inconsistencies in risk attitude elicitation games: Evidence from smallholder farmers in five African countries

Recent empirical studies eliciting farmers’ risk attitudes through lab-in-the-field experiments have reported high levels of inconsistency in responses. We investigate inconsistencies in risk attitudes elicitation games using data from incentivized lotteries involving 2,319 smallholder farmers from Eastern Africa (Kenya, Uganda, Tanzania) and Northern Africa (Tunisia, Morocco). Our sample demonstrates high levels of inconsistent behavior, with 48% of the farmers exhibiting some type of inconsistency. Depending on the country, inconsistencies are explained by poverty, gender, and/or the interaction of gender and level of education. We find no significant impact (negative or positive) of education alone in all but one country model. Furthermore, we find session fixed effects to significantly explain inconsistencies in many cases, suggesting that session-specific circumstances, including inconsistencies across enumerators, play a crucial role in the successful implementation of these experiments. Our findings suggest that using risk attitude parameters without accounting for the presence and the potential causes of inconsistency may lead to unreliable results. This study may guide practitioners in identifying farmer typologies more prone to inconsistent decisions and inform policymakers about factors influencing operators’ choices.

Financial Literacy, Fintech, and Risky Financial Investment in Urban Households—An Analysis Based on CHFS Data

In recent years, China’s financial markets have come under increasing scrutiny. In order to explore the impact of financial literacy on urban household investment in the risk financial market, this paper used the micro-data of the 2019 China Household Finance Survey (CHFS) to start from two perspectives: household risk financial investment and the number of investment financial products, namely the breadth of investment. By constructing a probit model and ordered probit model for empirical analysis, the main conclusions are as follows. Benchmark regression results show that the improvement of financial literacy can significantly promote urban households to make risky financial investments and can significantly broaden the types of risky financial investments. Based on the IV-probit model and two-stage least square method, the endogeneity test using the economic and financial information attention degree as the instrumental variable showed that the model results were credible. The robustness test showed that the model results were basically correct. Furthermore, the mechanism analysis found that the use of fintech played an intermediary effect in the process of financial literacy affecting urban household risky financial investment and the amount of investment. This indicates that the improvement of financial literacy can improve the probability of using fintech, thus promoting the household risky financial investment behavior. Heterogeneity analysis based on risk attitude showed that financial literacy had a greater effect on the improvement in the risky financial investment behavior of risk-inclined families, followed by risk-neutral families, and had the least effect on risk-averse families. The research conclusions of this paper are of practical significance to solve the problems related to urban household financial market investment. Therefore, this paper puts forward some suggestions for reference, especially in terms of financial education and the digital economy.

Limitations of the investor information confirmation form in capturing investor risk propensity

The financial consumer protection laws in South Korea emphasize the principle of suitability to ensure the well-being of the financial consumer. To adhere to these regulations, financial institutions utilize the behavioral risk assessment (BRA) form to assess investors’ characteristics. This study evaluates the effectiveness of these forms in capturing investor risk propensities, using Economic Risk Attitude (ERA), Instrumental Risk-Taking (IRT), and Stimulating Risk-Taking (SRT) as comparative benchmarks. Unlike previous research focused mainly on financial risk attitudes, this study introduces a multidimensional approach that includes psychological factors like SRT, offering a more comprehensive understanding of investor behavior. Findings reveal that while BRA assessments correlate with ERA and IRT, they fail to capture the excitement-driven aspects of risk propensity represented by SRT, indicating that BRA forms may inadequately reflect investors' risk profiles. This underscores the need for refining BRA forms by integrating psychological risk factors, advocating for a multidimensional framework that enhances consumer protection and enables more tailored investment strategies. The study contributes actionable insights for financial consumer protection and sets the stage for integrating advanced technologies, such as AI, to further refine risk assessments.

The Effect of Emotion Priming on Risk Attitudes among Southern Chinese College Students

Abstract: The correlation between emotions and risk attitudes has been thoroughly substantiated in various disciplines such as behavioral economics, finance, and psychology. Evidence has revealed that emotions, influenced by a range of emotional factors, have the potential to significantly affect risk attitudes. Building upon prior research, this study investigates the impact of certain emotional triggers on risk attitudes in a sample of university students in southern China. A total of 55 valid subjects, including 42 females (76.4%), were enrolled in the experiment. Their risk attitudes were assessed using multiple scales, and they were randomly assigned into three groups to receive positive, neutral, and negative emotional stimuli before making risky decisions separately. The findings demonstrated that individuals who were emotionally primed with a positive emotion video were more inclined to undertake hazardous decisions compared to those exposed to negative emotional priming. This outcome aligns with earlier studies indicating that positive emotions are linked with a heightened fondness for risky behavior. In conclusion, this study corroborates the relevance of this theory to a group of undergraduates in the south of China.

A game-based decision-making method for multi-ship collaborative collision avoidance reflecting risk attitudes in open waters

To accurately reflect risk attitudes towards ship intentions in multi-ship encounters, this paper develops a novel two-stage collaborative collision avoidance decision-making (CADM) model by incorporating intention prediction and real-time decision-making. We acquire prior knowledge of risk attitudes by analyzing Automatic Identification System (AIS) data and further estimate the probability distributions of encountering ship's risk attitude using Bayesian reasoning. By treating collision avoidance procedure as a static game with incomplete information, a predictive model for collision avoidance intentions is developed by taking account into risk attitude probabilities. Real-time decisions are then implemented according to different stages, and a collaborative CADM model is established by a game-decision cycle. Finally, a multi-ship encounter scenario is simulated under all combinations of risk attitudes, and the results are compared with those obtained under complete information. The results demonstrate that the proposed model can formulate avoidance actions that meet safety requirements under all combinations of risk attitudes. Further comparison with complete information proves the effectiveness of the risk attitude probability model, which is conducive to improving the decision-making flexibility and reducing complexity. The research findings enhance the collaborative decision-making, contributing to the development of autonomous navigation in open waters.

Joint Investment and Pricing Decisions in a Mobile Game Supply Chain Considering Risk Attitudes

Joint Investment and Pricing Decisions in a Mobile Game Supply Chain Considering Risk Attitudes

Risk attitude toward on-demand insurance: an experimental study

AbstractOn-demand insurance products cover risks for short periods of time via a smartphone or other electronic device. Such insurance contracts give policyholders the freedom to choose when to be insured in a flexible way. On-demand contracts may change the way risk is perceived. Therefore, we conduct an experiment and show that individuals can become exceptionally risk-averse when offered short-term insurance. We show two main reasons for this result: first, the underlying risk is often overestimated by the subjects due to a miscalculation of the loss probabilities. Second, the shorter valuation horizon of on-demand insurance contracts leads to myopic loss aversion.

On the Road Safety: Gender Differences in Risk-Taking Driving Behaviors Among Seniors Aged 65 and Older.

Background/Objectives: Life expectancies have increased in most countries, leading to a higher accident rate among older drivers than their younger counterparts. While numerous studies have analyzed the decline in cognitive abilities and physical limitations as contributing factors, there are other considerations. For instance, younger male drivers tend to take more risks than younger female drivers. However, there is a lack of research and evidence regarding the role of gender in risk-taking among individuals over 65. Given this gap, our current study aims to investigate the relationship between gender and risk propensity in this particular age group. The primary goal was to determine if driving experience affects the gender gap in risk attitude; Methods: We studied risk behavior in both car drivers and pedestrians. Our sample included 200 individuals (101 women), all over 65, with the same weekly driving times. After a brief demographic and anamnestic interview, they completed the Driver Road Risk Perception Scale (DRPS) and the Pedestrian Behavior Appropriateness Perception Scale (PBAS) questionnaires. They also provided information about traffic violations and road crashes; Results: Our research revealed that older male drivers continue to tend to risky behavior, highlighting the need for targeted interventions to improve risk awareness, especially among older men; Conclusions: Our findings suggest that road safety messages should specifically target male drivers as they are less likely to view responsible driving actions, such as observing speed limits, as desirable.

Does the Allais paradox survive with non-monetary consequences?

The form of the Allais paradox known as the common ratio effect (CRE) is a violation of deterministic expected utility theory that has been widely replicated with monetary outcomes. Its robustness has stimulated the development of numerous alternative models of risky choice. However, much less is known about the prevalence of the CRE in decisions involving non-monetary outcomes. We conduct a controlled laboratory comparison of the CRE for money versus consumer goods. The CRE is very strong with money, but largely disappears for goods, primarily as a result of differences in risk attitudes between goods and money. We caution against assuming that findings from experiments involving monetary lotteries will reliably generalise to other types of consequences.

Suicidal behavior among Turkish physicians: Associations with negative life-events, psychological distress, and attitudes towards suicide

BackgroundSuicidal behavior among physicians is a significant concern globally, with various factors contributing to increased risk. Physicians in Türkiye are a group facing significant psychological distress due to challenging work conditions, economic instability, and violence in the healthcare system. Understanding the specific risk factors and attitudes contributing to this elevated suicidal behavior can inform the development of targeted interventions and support mechanisms for improving the well-being of physicians in Türkiye. This study aims to investigate suicidal behavior among Turkish physicians and its associations with adverse life events, psychological distress, and attitudes toward suicide. MethodIn the present study, 512 Turkish physicians from diverse demographics and professional backgrounds participated. Suicidal behavior, psychological distress, stressful life events, and attitudes toward suicide were explored through tailored instruments. Logistic regression analysis was conducted to identify independent risk factors for suicidal behavior. ResultsThe results demonstrated that among Turkish physicians, psychological distress and suicidal behavior were frequent. One in five individuals (22.3%) reported experiencing one of the suicidal behaviors within the past month. Nearly one in ten (8.6%) have attempted suicide at some point in their lives. The average number of suicidal behaviors reported was .48 (SD = 1.1), and the average severity score for suicidal ideation was .51 (SD = 1.2). Young age, single marital status, low social support, psychological distress, the number of stressful life events, and the acceptability of suicide were identified as independent risk factors for suicidal behavior. Having a diagnosis of a psychiatric disorder and the number of stressful life events were factors associated with suicide attempts. ConclusionThe intricate associations between several factors that influence suicidal behavior among Turkish physicians are elucidated by this study. The results highlight the critical need for focused interventions and systems of support within the Turkish healthcare system to deal with this serious public health concern. Future studies and therapeutic practices can better meet the mental health requirements of this vulnerable demographic by considering the complex nature of suicidal behavior among physicians.

Prevalence of Disordered Eating Risk Attitudes in Youth Elite Male and Female Football Players.

Objectives: Examine the prevalence of risk behaviors for the development of eating disorders in academy footballers of the Liga MX, compare sociodemographic data and highlight the participants' perceptions regarding the influence of the sports environment and external pressure on their relationship with food and their bodies. Methods: A cross-sectional study was carried out with 536 footballers (331 men and 205 women) in the categories U14, U16, U18 men and U15, U19 women of Liga MX with prior consent from their clubs and strict confidentiality measures. The data were collected via Google Forms using the Eating Attitudes Test (EAT-26). Results: Of the participants, 13.4% met or exceeded the cut-off point on the EAT-26. The highest prevalence was observed in the Female U19 category. The reflections indicated that the sports environment and external pressure affect the relationship with food and bodies in a significant proportion of participants. Conclusions: The study highlights a high prevalence of risk behaviors for eating disorders in Liga MX football players, with a higher incidence in the female categories, also evidencing a multifactorial etiology.

Entrepreneurs’ impatience and digital technologies

AbstractThis paper analyzes the impact of entrepreneurs’ preferences (impatience and risk attitudes) on firms’ propensity to invest in both general and digital technologies. Using data from the Rilevazione su Imprese e Lavoro (RIL) survey, conducted on a representative sample of Italian firms, we find that impatience significantly reduces the likelihood of adopting digital investments, even when controlling for risk preferences. To address potential endogeneity and simultaneity concerns, we implement an instrumental variable (IV) strategy, exploiting exogenous variation from exposure to earthquakes. The findings remain robust and highlight the crucial role of impatience in shaping investment decisions, particularly in digital technologies.

Socio-Economic Characteristics of Producers and Economic Size Classes of Enterprises According To Typologies and Risk Attitudes in TR21 Region

The aim of this study was to determine the typologies of agricultural enterprises operating in the TR21 Region according to the Farm Accounting Data Network methodology and the risk attitudes of the producers. According to the typologies and risk attitudes of the enterprises, the socio-economic characteristics of the producers and the economic size classes of the enterprises were determined. As a result of sampling based on a 95% confidence interval and a 10% margin of error, the number of enterprises surveyed was determined as 334. While 63.77% of the enterprises were specialized in field crops, 25.45% engaged in mixed livestock and plant production. Additionally, 7.49% were specialized in pasture livestock and 3.29% were in the perennial plant farming group. In the enterprises examined, 55.09% of the producers were classified as risk-averse and 44.91% as risk-lover. Of the average land holdings, 71.25% was property and 28.75% was rented land. It was noteworthy that the land rental rate in risk-lover enterprises was higher than in risk-averse enterprises. It was concluded that risk-lover enterprises had higher production value in both plant production and animal production, and risk-averse enterprises were engaged with product and animal diversity as they avoided taking risks. On average, in risk-lover enterprises, 53.64% of the operating expenses were vegetative special expenses and 46.36% were animal special expenses. In risk-averse enterprises, the share of vegetative special expenses in total expenses was 47.15%, and the share of animal special expenses was 52.85%. Compared to the average of enterprises and all enterprise typologies, standard gross profit was found to be higher in risk-lover enterprises. In enterprise typology groups, the average ESU values of the enterprises varied between 10.88 and 33.80 ESU. According to enterprise typologies, risk-averse agricultural enterprises in specialized field crop farming and perennial plant farming were in the below-medium enterprise class, while other enterprise groups were in the above-medium enterprise class.

Italian winegrowers’ Acceptance of result-based agri-environmental schemes

Abstract As the debate around the cost-effectiveness of agri-environmental schemes (AES) is growing at the European level, researchers and policymakers are exploring the potential of result-based AES. Result-based AES initiate payments only if pre-defined environmental outcomes are achieved, thus increasing risks for farmers. Using a contingent valuation method, we investigated Italian winegrowers’ acceptance and intensity of participation in a result-based AES targeted at pollinators’ conservation in vineyards. We focused on the role of farmers’ behavioural factors and risk attitudes in driving the acceptance. Results show that, among the 222 farmers who completed the survey, 71 per cent of participants are willing to participate in such a scheme. Non-participation is associated with a high perceived bureaucratic burden. Risk also plays a significant role, as the perceived risk of the scheme decreases the likelihood of enrolment, while risk-seeking farmers are more likely to participate. We found no evidence of risk affecting the intensity of participation. In contrast, while a treatment of a randomly assigned rare-species bonus did not affect the scheme's overall acceptance, it positively influenced intensity. Behavioural factors appear to be related to both acceptance and intensity. Considering this, we suggest strategies to encourage farmer participation in result-based AES.

Financial Risk Attitude, Environmental Dynamism and Financial Sustainability of Small and Medium Enterprises in Nairobi, Kenya

Financial Risk Attitude, Environmental Dynamism and Financial Sustainability of Small and Medium Enterprises in Nairobi, Kenya

Do retail investors gamble more during lockdown?

AbstractRetail investors are known to favor stocks with lottery‐like features and trade too much. Less is known about their intertemporal demand and risk‐taking behavior in lottery‐type stocks. We use intraday transaction data between September 2019 and June 2020 from the Stock Exchange of Thailand to test how individual's risk attitude changes with respect to decline in their wealth prospects during the COVID‐19 lockdown. The behavior of the investors supports a reference dependent preference. Confronted with lowered wealth prospects, retail investors substantially reduce their underweighting in nonlottery stocks while increasing overweighting and turnover frequency in lottery stocks resulting in deteriorating portfolio performance.

Penalties imposed on board chairs and corporate innovation: evidence from China

ABSTRACT While previous literature has explored the role of board chairs in firm performance, little is known about how penalties imposed on board chairs shape firms’ strategic decisions and their risk attitude. This study investigates the impact of penalties imposed on board chairs on corporate innovation. Drawing upon the reputation repair and resource dependence perspectives, we present two competing hypotheses that provide distinct insights into how penalties imposed on board chairs influence corporate innovation. Employing a comprehensive dataset of Chinese listed firms, we find that penalties imposed on board chairs lead to a decline in corporate innovation, supporting the resource dependence hypothesis. Further analysis find that this effect is more pronounced in firms with low redundant resources, high media attention, high industry competition, and those are non-state-owned. Our findings contribute to the growing body of the literature on board chairs, innovation and regulatory penalties by exploring the impact of penalties against board chairs on corporate innovation.

Digital economy, risk attitudes, and entrepreneurial decision-making in urban and rural households in China

Using data from the 2019 China Household Finance Survey, this study examines how the digital economy and household risk attitudes affect entrepreneurial decision-making in urban and rural Chinese households. Risk-taking families are more likely to become entrepreneurs, particularly in economically developed eastern regions. Furthermore, integrating the digital economy boosts entrepreneurial activities within households, especially in the central and western regions. Based on these findings, the government and relevant institutions should strengthen digital infrastructure in the central and western regions, as well as establish an evaluation and monitoring mechanism to ensure the effectiveness of policy measures to promote balanced economic development and sustainable growth in household entrepreneurial activity.

Risk Propensity and Acceptance of Gene-edited and Genetically Modified Food among US Consumers: A Comparison between Plants and Animal Products

Abstract Utilizing online survey data of US consumers, this study examines the extent to which consumers' acceptance of genetically modified (GM) and gene-edited (GE) food is driven by their risk attitudes. Our results indicate that individuals with high-risk propensity are more likely to accept both GM and GE food than individuals with low- and medium-risk propensity. Our results also find differences in consumers' attitudes toward plants and animal products in the context of both GM and GE. Intriguingly, these attitudinal differences can be explained by consumers' risk propensities. Specifically, both low- and medium-risk propensity consumers differentiate between plants and animal products; the latter is less acceptable than the former, indicating a tendency to have more concerns about the application of biotechnology to animals than plants. However, individuals with high-risk propensity do not differentiate between GM and GE plants and animal products. Our results suggest that policymakers, the food industry, and researchers need to consider these attitudinal differences while studying consumer attitudes toward GM and GE food. Failing to capture these attitudinal differences in studies focusing on consumer behavior toward GM and GE food may result in either overestimating or underestimating consumer response.