We report results from a study of superannuation member advice‐seeking within their plan, explaining observed patterns by member age, gender, issue salience and size‐of‐bet effect. Inquiry mode, frequency and volume of contact with the advice‐provider, and sensitivity of members to legislative change and macroeconomic events are considered. Results show that gender (female more likely than male), age (older rather than younger), balance (larger rather than smaller) and experience (longer rather than shorter) are the strongest advice‐seeking predictors, consistent over time. Findings suggest member engagement around retirement planning may be more effective when considering the factors affecting advice‐seeking behaviour in general.
{"title":"Determinants of Seeking Advice within Defined Contribution Retirement Savings Schemes","authors":"G. Clark, Maurizio Fiaschetti, P. Gerrans","doi":"10.1111/acfi.12397","DOIUrl":"https://doi.org/10.1111/acfi.12397","url":null,"abstract":"We report results from a study of superannuation member advice‐seeking within their plan, explaining observed patterns by member age, gender, issue salience and size‐of‐bet effect. Inquiry mode, frequency and volume of contact with the advice‐provider, and sensitivity of members to legislative change and macroeconomic events are considered. Results show that gender (female more likely than male), age (older rather than younger), balance (larger rather than smaller) and experience (longer rather than shorter) are the strongest advice‐seeking predictors, consistent over time. Findings suggest member engagement around retirement planning may be more effective when considering the factors affecting advice‐seeking behaviour in general.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"210 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121276211","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We introduce a neureconomic "autopilot" model of habit, based on many studies of animal learning and human habituation. In this approach, there are two systems for valuation-- habit and goal-directed. The habitual system recalls the previous choice (which can be dependent on a contextual state), and the reliability of reward of that choice. (Reliability is the absolute value of reward prediction error, so a low value is associated with reliability.) If the reliability is below a threshold the habitual choice is made. Otherwise a goal directed utility-maximizing choice is made. A simple two-choice model is used to show how short-run own-price elasticities can be zero in this model while longer-run elasticities are negative. The theory is quite different than habit formation, as modelled by adjacent complementarity or reference-dependence in other economic theories. In the autopilot model, the structural driver of habit is reward reliability. When this number is persistent, choice is persistent. Persistent behavioral choice is therefore a byproduct of reward reliability and is not the correct preference specification.
{"title":"The Neuroeconomics of Habit","authors":"C. Camerer, P. Landry, Ryan Webb","doi":"10.2139/ssrn.3752193","DOIUrl":"https://doi.org/10.2139/ssrn.3752193","url":null,"abstract":"We introduce a neureconomic \"autopilot\" model of habit, based on many studies of animal learning and human habituation. In this approach, there are two systems for valuation-- habit and goal-directed. The habitual system recalls the previous choice (which can be dependent on a contextual state), and the reliability of reward of that choice. (Reliability is the absolute value of reward prediction error, so a low value is associated with reliability.) If the reliability is below a threshold the habitual choice is made. Otherwise a goal directed utility-maximizing choice is made. A simple two-choice model is used to show how short-run own-price elasticities can be zero in this model while longer-run elasticities are negative. The theory is quite different than habit formation, as modelled by adjacent complementarity or reference-dependence in other economic theories. In the autopilot model, the structural driver of habit is reward reliability. When this number is persistent, choice is persistent. Persistent behavioral choice is therefore a byproduct of reward reliability and is not the correct preference specification.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"114 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131891191","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We asked 97 cigarette smokers to make a series of 12 binary choices between experimental cigarette packages with varying warnings and background colors. Each smoker had to decide which of the two packages contained cigarettes less risky for his health. We tested whether the smokers, confronted with warnings that were repugnant and threatening to many of them, could still make choices that adhered to the standard axioms of rational choice. We supplemented our observations on smokers choices with data on their eye movements. We find that participants universally made choices consistent with a complete, transitive preference ordering. We find little evidence of inconsistent choices violating the weak axiom of revealed preference. In a majority of smokers, we find strong evidence of the use of a lexicographic decision rule to assess the riskiness of a cigarette package. These smokers first ranked the two packages solely on the basis of their warnings. Only when the two packages had the same warning did they rankthe packages on the basis of their color. The data on eye tracking strongly confirmed the lexicographic nature of the underlying decision rule. Our studyrepresentsan entirely different angle of inquiry into thequestion of rational addiction.
{"title":"Smokers’ Rational Lexicographic Preferences for Cigarette Package Warnings: A Discrete Choice Experiment with Eye Tracking","authors":"J. Harris, Mariana Gerstenblüth, P. Triunfo","doi":"10.3386/W24974","DOIUrl":"https://doi.org/10.3386/W24974","url":null,"abstract":"We asked 97 cigarette smokers to make a series of 12 binary choices between experimental cigarette packages with varying warnings and background colors. Each smoker had to decide which of the two packages contained cigarettes less risky for his health. We tested whether the smokers, confronted with warnings that were repugnant and threatening to many of them, could still make choices that adhered to the standard axioms of rational choice. We supplemented our observations on smokers choices with data on their eye movements. We find that participants universally made choices consistent with a complete, transitive preference ordering. We find little evidence of inconsistent choices violating the weak axiom of revealed preference. In a majority of smokers, we find strong evidence of the use of a lexicographic decision rule to assess the riskiness of a cigarette package. These smokers first ranked the two packages solely on the basis of their warnings. Only when the two packages had the same warning did they rankthe packages on the basis of their color. The data on eye tracking strongly confirmed the lexicographic nature of the underlying decision rule. Our studyrepresentsan entirely different angle of inquiry into thequestion of rational addiction.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121204594","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We explore network effects in capital structure decision making. The economy is presented as a set of nodes (industries) and edges (trading links between them). First, we propose a simple theoretical setup which allows us to illustrate numerically joint dynamics of optimal capital structure choices with respect to agents' characteristics and the intensity of input-output links.We find that the position of an industry in the network affects its capital structure policy. The more suppliers or customers an industry has or the more connected to other industries it is, the higher its leverage becomes. These effects explain 2 p.p. variation of the leverage. Our second finding is a positive dependence between partner industries’ leverages. It implies that industries with highly levered partners are prone to keep higher leverage. This result supports the theory that leverage is partly used as an instrument to improve an economic agent’s bargaining position. The results are confirmed under multiple robustness checks.
{"title":"Capital Structure Decisions in the Supplier-Customer Network","authors":"I. Prostakova","doi":"10.2139/ssrn.3222201","DOIUrl":"https://doi.org/10.2139/ssrn.3222201","url":null,"abstract":"We explore network effects in capital structure decision making. The economy is presented as a set of nodes (industries) and edges (trading links between them). First, we propose a simple theoretical setup which allows us to illustrate numerically joint dynamics of optimal capital structure choices with respect to agents' characteristics and the intensity of input-output links.We find that the position of an industry in the network affects its capital structure policy. The more suppliers or customers an industry has or the more connected to other industries it is, the higher its leverage becomes. These effects explain 2 p.p. variation of the leverage. Our second finding is a positive dependence between partner industries’ leverages. It implies that industries with highly levered partners are prone to keep higher leverage. This result supports the theory that leverage is partly used as an instrument to improve an economic agent’s bargaining position. The results are confirmed under multiple robustness checks.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"291 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134347694","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Haojie Wang, Han Chen, A. Sudjianto, Richard S. Liu, Qi Shen
The Libor market model is a mainstay term structure model of interest rates for derivatives pricing, especially for Bermudan swaptions, and other exotic Libor callable derivatives. For numerical implementation the pricing of derivatives with Libor market models is mainly carried out with Monte Carlo simulation. The PDE grid approach is not particularly feasible due to Curse of Dimensionality. The standard Monte Carlo method for American/Bermudan swaption pricing more or less uses regression to estimate expected value as a linear combination of basis functions (Longstaff and Schwartz). However, Monte Carlo method only provides the lower bound for American option price. Another complexity is the computation of the sensitivities of the option, the so-called Greeks, which are fundamental for a trader's hedging activity. Recently, an alternative numerical method based on deep learning and backward stochastic differential equations appeared in quite a few researches. For European style options the feedforward deep neural networks (DNN) show not only feasibility but also efficiency to obtain both prices and numerical Greeks. In this paper, a new backward DNN solver is proposed for Bermudan swaptions. Our approach is representing financial pricing problems in the form of high dimensional stochastic optimal control problems, FBSDEs, or equivalent PDEs. We demonstrate that using backward DNN the high-dimension Bermudan swaption pricing and hedging can be solved effectively and efficiently. A comparison between Monte Carlo simulation and the new method for pricing vanilla interest rate options manifests the superior performance of the new method. We then use this method to calculate prices and Greeks of Bermudan swaptions as a prelude for other Libor callable derivatives.
{"title":"Deep Learning-Based BSDE Solver for Libor Market Model with Applications to Bermudan Swaption Pricing and Hedging","authors":"Haojie Wang, Han Chen, A. Sudjianto, Richard S. Liu, Qi Shen","doi":"10.2139/ssrn.3214596","DOIUrl":"https://doi.org/10.2139/ssrn.3214596","url":null,"abstract":"The Libor market model is a mainstay term structure model of interest rates for derivatives pricing, especially for Bermudan swaptions, and other exotic Libor callable derivatives. For numerical implementation the pricing of derivatives with Libor market models is mainly carried out with Monte Carlo simulation. The PDE grid approach is not particularly feasible due to Curse of Dimensionality. The standard Monte Carlo method for American/Bermudan swaption pricing more or less uses regression to estimate expected value as a linear combination of basis functions (Longstaff and Schwartz). However, Monte Carlo method only provides the lower bound for American option price. Another complexity is the computation of the sensitivities of the option, the so-called Greeks, which are fundamental for a trader's hedging activity. Recently, an alternative numerical method based on deep learning and backward stochastic differential equations appeared in quite a few researches. For European style options the feedforward deep neural networks (DNN) show not only feasibility but also efficiency to obtain both prices and numerical Greeks. In this paper, a new backward DNN solver is proposed for Bermudan swaptions. Our approach is representing financial pricing problems in the form of high dimensional stochastic optimal control problems, FBSDEs, or equivalent PDEs. We demonstrate that using backward DNN the high-dimension Bermudan swaption pricing and hedging can be solved effectively and efficiently. A comparison between Monte Carlo simulation and the new method for pricing vanilla interest rate options manifests the superior performance of the new method. We then use this method to calculate prices and Greeks of Bermudan swaptions as a prelude for other Libor callable derivatives.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"159 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115186461","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We carried out an experiment which simulated an online investment platform and recruited over one thousand non-advised investors to participate in the research. Drawing on the relevant behavioural literature as well as our own qualitative research we developed four treatments to test. In summary, all of our treatments increased the proportion of investors choosing a cheaper fund and some of the effects were sizable. However, the increased focus on charges did not seem to reduce the importance that participants placed on other fund characteristics such as performance or risk. A warning message appeared to improve decision-making, particularly when it was coupled with a chart showing the impact of charges or a screen providing a summary of charges just before an investor purchased a fund. The treatments which were most impactful were also prominently positioned on pages which all investors had to view.
{"title":"Now You See It: Drawing Attention to Charges in the Asset Management Industry","authors":"Lucy Hayes, Anish Thakrar, William Lee","doi":"10.2139/ssrn.3190111","DOIUrl":"https://doi.org/10.2139/ssrn.3190111","url":null,"abstract":"We carried out an experiment which simulated an online investment platform and recruited over one thousand non-advised investors to participate in the research. Drawing on the relevant behavioural literature as well as our own qualitative research we developed four treatments to test. In summary, all of our treatments increased the proportion of investors choosing a cheaper fund and some of the effects were sizable. However, the increased focus on charges did not seem to reduce the importance that participants placed on other fund characteristics such as performance or risk. A warning message appeared to improve decision-making, particularly when it was coupled with a chart showing the impact of charges or a screen providing a summary of charges just before an investor purchased a fund. The treatments which were most impactful were also prominently positioned on pages which all investors had to view.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126252489","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The present research report emphases on studying the impact of internet advertising on consumer buying behaviour, which raises the consumers' intentions towards the product and buying behaviours. The purchasing behaviour is strongly influenced by the image of the product which is built by the advertisers. Advertisers are expected to shift their focus and spend millions in internet advertising in the coming years than TV, print ads and another traditional advertising media.Online shopping is a growing trend in India and the numbers of both sellers and buyers are increasing daily by whopping percentages. India’s total online sales figure is estimated to reach the US $100 billion by 2020. With the rapid growth in technology, the internet is becoming an important one stop point for consumers in finding most of their needs. Be it communication, entertainment, information search or shopping, internet serves as a panacea for all their requirements. According to the global networking giant Cisco, Digital transformation will take India's internet users from 373 million (28 percent of population) in 2016 to 829 million (59 percent of the Indian population) in 2021. This clearly demonstrates that India is growing fast and people are becoming habitual of using the Internet as the evolution of human society, the improvement in Communication processes and Digital Convergence open up innovative opportunities and challenges for Marketing. Subsequently, the Internet has moved ahead to play a significant role in the Consumer Decision Making Process. Many consumers are online every day for their personal & official work, but do they notice the ads, banners displayed on that webpage and most important thing is to check what is their recall value. The current study investigated the impact of internet advertising on consumer buying behaviour by conducting a survey.
{"title":"A Descriptive Study of the Effectiveness of Internet Advertising on Consumer Buying Behavior in Nagpur City","authors":"Anupkumar Dhore, Snehal Godbole","doi":"10.2139/ssrn.3341924","DOIUrl":"https://doi.org/10.2139/ssrn.3341924","url":null,"abstract":"The present research report emphases on studying the impact of internet advertising on consumer buying behaviour, which raises the consumers' intentions towards the product and buying behaviours. The purchasing behaviour is strongly influenced by the image of the product which is built by the advertisers. Advertisers are expected to shift their focus and spend millions in internet advertising in the coming years than TV, print ads and another traditional advertising media.Online shopping is a growing trend in India and the numbers of both sellers and buyers are increasing daily by whopping percentages. India’s total online sales figure is estimated to reach the US $100 billion by 2020. With the rapid growth in technology, the internet is becoming an important one stop point for consumers in finding most of their needs. Be it communication, entertainment, information search or shopping, internet serves as a panacea for all their requirements. According to the global networking giant Cisco, Digital transformation will take India's internet users from 373 million (28 percent of population) in 2016 to 829 million (59 percent of the Indian population) in 2021. This clearly demonstrates that India is growing fast and people are becoming habitual of using the Internet as the evolution of human society, the improvement in Communication processes and Digital Convergence open up innovative opportunities and challenges for Marketing. Subsequently, the Internet has moved ahead to play a significant role in the Consumer Decision Making Process. Many consumers are online every day for their personal & official work, but do they notice the ads, banners displayed on that webpage and most important thing is to check what is their recall value. The current study investigated the impact of internet advertising on consumer buying behaviour by conducting a survey.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129355949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study a model of Bayesian persuasion in which Receiver has limited information-processing capacity, or attention, and must exert costly effort to process Sender’s signals. Receiver is rationally inattentive (Sims (2003)): attention costs are proportional to the mutual information (expected entropy reduction) between Sender’s signals and Receiver’s “perceptions” of them. Information disclosure plays a dual role: in addition to the usual persuasion motive, Sender engages in strategic attention manipulation. When Receiver has a binary action choice, we characterize the optimal persuasion strategy using a first-order approach. At the optimum, “complex” signals are used to exploit Receiver’s limited attention when interests are misaligned, and “simple and convincing” signals are used to focus attention when interests are aligned. When the persuasion motive is absent (preferences are aligned) we trace the attention manipulation motive to the multi-dimensionality of information and the extensive margin of attention allocation: if the state space is binary or Receiver faces a pure capacity constraint, full disclosure is uniquely optimal. Applications include advertising, information management in organizations, design of disclosure regulations, and dual-process theories of attention and choice. We also discuss formal connections to models of (i) persuasion with a privately informed Receiver and (ii) contracting with flexible information acquisition, as well as extensions to cheap talk communication.
{"title":"Persuasion with Rational Inattention","authors":"A. Bloedel, I. Segal","doi":"10.2139/ssrn.3164033","DOIUrl":"https://doi.org/10.2139/ssrn.3164033","url":null,"abstract":"We study a model of Bayesian persuasion in which Receiver has limited information-processing capacity, or attention, and must exert costly effort to process Sender’s signals. Receiver is rationally inattentive (Sims (2003)): attention costs are proportional to the mutual information (expected entropy reduction) between Sender’s signals and Receiver’s “perceptions” of them. Information disclosure plays a dual role: in addition to the usual persuasion motive, Sender engages in strategic attention manipulation. When Receiver has a binary action choice, we characterize the optimal persuasion strategy using a first-order approach. At the optimum, “complex” signals are used to exploit Receiver’s limited attention when interests are misaligned, and “simple and convincing” signals are used to focus attention when interests are aligned. When the persuasion motive is absent (preferences are aligned) we trace the attention manipulation motive to the multi-dimensionality of information and the extensive margin of attention allocation: if the state space is binary or Receiver faces a pure capacity constraint, full disclosure is uniquely optimal. Applications include advertising, information management in organizations, design of disclosure regulations, and dual-process theories of attention and choice. We also discuss formal connections to models of (i) persuasion with a privately informed Receiver and (ii) contracting with flexible information acquisition, as well as extensions to cheap talk communication.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128004579","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The study was aimed at determining the impacts of factors that influence the purchasing decision of Butter Oil Substitute (BOS) in coffee roasting industry. The study was carried out in Ho Chi Minh City on 88 customers using face to face interview and structured questionnaire as the instruments for data collection. Questions were designed to find out how consumers behave in relation to BOS for coffee roasting. The study showed that the purchase of BOS in coffee roasting industry is influenced mostly by the customer’s price consciousness, relationship between buyer and seller, and customer service. The study can be used as references for the planning of marketing strategies and as the basis for future researches in the customer behavior with regard to bakery customers (another application of BOS) and specialty fats in general.
{"title":"Factors Influencing Customer Behavior of Butter Oil Substitute in Vietnam","authors":"Giao Ha Nam Khanh","doi":"10.2139/ssrn.3695862","DOIUrl":"https://doi.org/10.2139/ssrn.3695862","url":null,"abstract":"The study was aimed at determining the impacts of factors that influence the purchasing decision of Butter Oil Substitute (BOS) in coffee roasting industry. The study was carried out in Ho Chi Minh City on 88 customers using face to face interview and structured questionnaire as the instruments for data collection. Questions were designed to find out how consumers behave in relation to BOS for coffee roasting. The study showed that the purchase of BOS in coffee roasting industry is influenced mostly by the customer’s price consciousness, relationship between buyer and seller, and customer service. The study can be used as references for the planning of marketing strategies and as the basis for future researches in the customer behavior with regard to bakery customers (another application of BOS) and specialty fats in general.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"677 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132449959","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Investing into the financial markets has become increasingly complex in recent years, with a multitude of investment products and motives. With the rapid growth in social investing and social entrepreneurship, scholars recognise that investors and entrepreneurs often consider a wide range of social factors, in addition to financial return, when making their financial decisions. Behavioural economists argue that it is important to understand the complex economic and behavioural/psychological factors affecting social investors’ decision-making. In this paper, we draw upon lessons from behavioural economics (and in particular, social preference theory) in order to develop neuro-economic tests of investors’ social and financial mind-sets. We focus on two main research questions: a) How heterogeneous are (social-) investors, in terms of the unconscious weightings that they place upon financial and social returns? Can investors’ mind-sets be placed upon a continuum from focussing on social returns, through mixed motivations/weightings, through to focussing on financial returns? b). Can investors be nudged along this continuum? We address these two research questions by means of two neuro-experiments. We employ eye-tracking techniques to examine investors’ attention to, and fixation on, social and financial aspects of financial market investment. In addition, we employ nudges in the form of images relating to positive and negative social behaviour. Our experiments demonstrate that a) investors can indeed be placed on the financial-social motivation continuum (and that there is heterogeneity in social-investors’ motives along this scale), and b) investors can be nudged along the scale. Our experiments thus provide policy implications regarding nudges towards social investment. Practically, we suggest the development of a phone application that integrates real-time stock-tracking with nudges in order to inspire socially responsible investing; banks would play a key role in encouraging its download. Nudges can help to overcome the conflict between social and financial returns.
{"title":"The Conflict Between Economic and Social Preferences: Social Investing, Social Enterprise, Mind-Sets and Nudges","authors":"N. Hinvest, Richard J. Fairchild, Habiba Elkholy","doi":"10.2139/ssrn.3135226","DOIUrl":"https://doi.org/10.2139/ssrn.3135226","url":null,"abstract":"Investing into the financial markets has become increasingly complex in recent years, with a multitude of investment products and motives. With the rapid growth in social investing and social entrepreneurship, scholars recognise that investors and entrepreneurs often consider a wide range of social factors, in addition to financial return, when making their financial decisions. Behavioural economists argue that it is important to understand the complex economic and behavioural/psychological factors affecting social investors’ decision-making. In this paper, we draw upon lessons from behavioural economics (and in particular, social preference theory) in order to develop neuro-economic tests of investors’ social and financial mind-sets. We focus on two main research questions: a) How heterogeneous are (social-) investors, in terms of the unconscious weightings that they place upon financial and social returns? Can investors’ mind-sets be placed upon a continuum from focussing on social returns, through mixed motivations/weightings, through to focussing on financial returns? b). Can investors be nudged along this continuum? We address these two research questions by means of two neuro-experiments. We employ eye-tracking techniques to examine investors’ attention to, and fixation on, social and financial aspects of financial market investment. In addition, we employ nudges in the form of images relating to positive and negative social behaviour. Our experiments demonstrate that a) investors can indeed be placed on the financial-social motivation continuum (and that there is heterogeneity in social-investors’ motives along this scale), and b) investors can be nudged along the scale. Our experiments thus provide policy implications regarding nudges towards social investment. Practically, we suggest the development of a phone application that integrates real-time stock-tracking with nudges in order to inspire socially responsible investing; banks would play a key role in encouraging its download. Nudges can help to overcome the conflict between social and financial returns.","PeriodicalId":224430,"journal":{"name":"Decision-Making in Economics eJournal","volume":"71 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132832331","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：