In this essay, I revisit the question of which motive underlies insurance demand. I draw on the literature of state-dependent utility and on the literature of imperfectly divisible consumption to argue that the general purpose of insurance is not a risk transfer, but meeting a conditional need. I discuss how this understanding of insurance extends the traditional view of insurance and I show how this extension has implications for our discipline’s research agenda and policy advice.
{"title":"Why People Buy Insurance: A Modern Answer to an Old Question","authors":"Markus Fels","doi":"10.2139/ssrn.3352604","DOIUrl":"https://doi.org/10.2139/ssrn.3352604","url":null,"abstract":"In this essay, I revisit the question of which motive underlies insurance demand. I draw on the literature of state-dependent utility and on the literature of imperfectly divisible consumption to argue that the general purpose of insurance is not a risk transfer, but meeting a conditional need. I discuss how this understanding of insurance extends the traditional view of insurance and I show how this extension has implications for our discipline’s research agenda and policy advice.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125900766","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}
This paper develops a tractable dynamic model to study bank runs in a financial system, featuring the linkage between bank runs and asset market prices. The model speaks to the evolution of a systemic crisis. In our model economy, there are many banks and they share a common asset market. The interim liquidation value of a bank is endogenous and depends on its asset fundamentals, on the status of other banks and hence the aggregate fire sales in the system, and on the endogenous path-dependent market liquidity condition. We analytically characterize the dynamics of the interplay between market liquidity and bank runs. Our model shows runs-illiquidity traps with two steady-state equilibria and a crisis process consisting of an initial gradual decline followed by a sudden sharp crash in the transitional dynamics. Our theory explains empirical facts and gives new policy implications.
{"title":"A Dynamic Model of Systemic Bank Runs","authors":"Xuewen Liu","doi":"10.2139/ssrn.3375547","DOIUrl":"https://doi.org/10.2139/ssrn.3375547","url":null,"abstract":"This paper develops a tractable dynamic model to study bank runs in a financial system, featuring the linkage between bank runs and asset market prices. The model speaks to the evolution of a systemic crisis. In our model economy, there are many banks and they share a common asset market. The interim liquidation value of a bank is endogenous and depends on its asset fundamentals, on the status of other banks and hence the aggregate fire sales in the system, and on the endogenous path-dependent market liquidity condition. We analytically characterize the dynamics of the interplay between market liquidity and bank runs. Our model shows runs-illiquidity traps with two steady-state equilibria and a crisis process consisting of an initial gradual decline followed by a sudden sharp crash in the transitional dynamics. Our theory explains empirical facts and gives new policy implications.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125559361","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}
Against the background of aging societies and increasing life expectancies, the protection of individuals from outliving their savings has become increasingly relevant. Annuities represent insurance against longevity risk and can prevent old‐age poverty. The aim of this article is to present the current state of theoretical, empirical and experimental evidence with regard to annuitization decisions. Toward this end, we conduct a systematic literature review that includes 89 articles. Based on this, we study welfare effects of mandatory annuitization, annuitization rates and the optimal fraction of wealth to be annuitized, as well as determinants of retirees’ choice to annuitize and their impact on annuity demand. Finally, we present possible solutions for overcoming the low uptake of annuities based on its causes. One main result is that behavioral biases in annuitization decisions particularly require considerably more theoretical research and empirical evidence, and that theoretical models already appear to well explain empirically observed annuitization rates.
{"title":"What Do We Know About Annuitization Decisions?","authors":"Maria Alexandrova, Nadine Gatzert","doi":"10.1111/rmir.12115","DOIUrl":"https://doi.org/10.1111/rmir.12115","url":null,"abstract":"Against the background of aging societies and increasing life expectancies, the protection of individuals from outliving their savings has become increasingly relevant. Annuities represent insurance against longevity risk and can prevent old‐age poverty. The aim of this article is to present the current state of theoretical, empirical and experimental evidence with regard to annuitization decisions. Toward this end, we conduct a systematic literature review that includes 89 articles. Based on this, we study welfare effects of mandatory annuitization, annuitization rates and the optimal fraction of wealth to be annuitized, as well as determinants of retirees’ choice to annuitize and their impact on annuity demand. Finally, we present possible solutions for overcoming the low uptake of annuities based on its causes. One main result is that behavioral biases in annuitization decisions particularly require considerably more theoretical research and empirical evidence, and that theoretical models already appear to well explain empirically observed annuitization rates.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"126 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115987715","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 tools to capture the dynamics of three different pathways, in which the synchronization of human decision-making could lead to turbulent periods and contagion phenomena in financial markets. The first pathway is caused when stock market indices, seen as a set of coupled integrate-and-fire oscillators, synchronize in frequency. The integrate-and-fire dynamics happens due to “change blindness”, a trait in human decision-making where people have the tendency to ignore small changes, but take action when a large change happens. The second pathway happens due to feedback mechanisms between market performance and the use of certain (decoupled) trading strategies. The third pathway occurs through the effects of communication and its impact on human decision-making. A model is introduced in which financial market performance has an impact on decision-making through communication between people. Conversely, the sentiment created via communication has an impact on financial market performance. The methodologies used are: agent based modeling, models of integrate-and-fire oscillators, and communication models of human decision-making.
{"title":"Three Different Ways Synchronization Can Cause Contagion in Financial Markets","authors":"N. Massad, J. Vitting Andersen","doi":"10.2139/ssrn.3343761","DOIUrl":"https://doi.org/10.2139/ssrn.3343761","url":null,"abstract":"We introduce tools to capture the dynamics of three different pathways, in which the synchronization of human decision-making could lead to turbulent periods and contagion phenomena in financial markets. The first pathway is caused when stock market indices, seen as a set of coupled integrate-and-fire oscillators, synchronize in frequency. The integrate-and-fire dynamics happens due to “change blindness”, a trait in human decision-making where people have the tendency to ignore small changes, but take action when a large change happens. The second pathway happens due to feedback mechanisms between market performance and the use of certain (decoupled) trading strategies. The third pathway occurs through the effects of communication and its impact on human decision-making. A model is introduced in which financial market performance has an impact on decision-making through communication between people. Conversely, the sentiment created via communication has an impact on financial market performance. The methodologies used are: agent based modeling, models of integrate-and-fire oscillators, and communication models of human decision-making.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121289161","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}
Abstract We re-examine the problem of budget-constrained demand for insurance indemnification when the insured and the insurer disagree about the likelihoods associated with the realizations of the insurable loss. For ease of comparison with the classical literature, we adopt the original setting of Arrow (1971), but allow for divergence in beliefs between the insurer and the insured; and in particular for singularity between these beliefs, that is, disagreement about zero-probability events. We do not impose the no sabotage condition on admissible indemnities. Instead, we impose a state-verification cost that the insurer can incur in order to verify the loss severity, which rules out ex post moral hazard issues that could otherwise arise from possible misreporting of the loss by the insured. Under a mild consistency requirement between these beliefs that is weaker than the Monotone Likelihood Ratio (MLR) condition, we characterize the optimal indemnity and show that it has a simple two-part structure: full insurance on an event to which the insurer assigns zero probability, and a variable deductible on the complement of this event, which depends on the state of the world through a likelihood ratio. The latter is obtained from a Lebesgue decomposition of the insured’s belief with respect to the insurer’s belief.
{"title":"Budget-Constrained Optimal Insurance with Belief Heterogeneity","authors":"Mario Ghossoub","doi":"10.2139/ssrn.3230312","DOIUrl":"https://doi.org/10.2139/ssrn.3230312","url":null,"abstract":"Abstract We re-examine the problem of budget-constrained demand for insurance indemnification when the insured and the insurer disagree about the likelihoods associated with the realizations of the insurable loss. For ease of comparison with the classical literature, we adopt the original setting of Arrow (1971), but allow for divergence in beliefs between the insurer and the insured; and in particular for singularity between these beliefs, that is, disagreement about zero-probability events. We do not impose the no sabotage condition on admissible indemnities. Instead, we impose a state-verification cost that the insurer can incur in order to verify the loss severity, which rules out ex post moral hazard issues that could otherwise arise from possible misreporting of the loss by the insured. Under a mild consistency requirement between these beliefs that is weaker than the Monotone Likelihood Ratio (MLR) condition, we characterize the optimal indemnity and show that it has a simple two-part structure: full insurance on an event to which the insurer assigns zero probability, and a variable deductible on the complement of this event, which depends on the state of the world through a likelihood ratio. The latter is obtained from a Lebesgue decomposition of the insured’s belief with respect to the insurer’s belief.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121458535","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}
Purpose The purpose of this paper is to investigate how market liquidity condition of corporate bonds can affect firm investment policy, specifically its risk taking, via the disciplinary function of trading. Design/methodology/approach The paper uses fixed-effects OLS and Poisson regression for the baseline specifications. It also employs the introduction of TRACE in 2002 as an exogenous shock to bond trading infrastructure in a difference-to-difference framework to address endogeneity concerns and establish causality. Findings The paper documents a positive relationship between bond illiquidity and firms’ risk taking, specifically a one standard deviation increase in Amihud illiquidity measure is associated with nearly 20 percent increase in exploratory investments compared to CAPEX. The shift in risk taking in turn increases firms’ innovation output to some extent. Research limitations/implications The findings have important implications on firm’s risk taking and growth. The paper identifies a new channel through which firm’s choice of risk can be influenced, namely, bondholder disciplining. The study also has implications about externalities of trading beyond liquidity cost for regulators in designing market microstructure. Originality/value This is the first to study the disciplinary role of bond trading. Conventional wisdom holds that bondholders are passive creditors who do not engage in costly monitoring such as banks. The findings in this paper imply that this may not be the case.
{"title":"Bond Liquidity, Risk Taking and Corporate Innovation","authors":"H. Dang, Ha Diep-Nguyen","doi":"10.2139/ssrn.3328968","DOIUrl":"https://doi.org/10.2139/ssrn.3328968","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to investigate how market liquidity condition of corporate bonds can affect firm investment policy, specifically its risk taking, via the disciplinary function of trading.\u0000\u0000\u0000Design/methodology/approach\u0000The paper uses fixed-effects OLS and Poisson regression for the baseline specifications. It also employs the introduction of TRACE in 2002 as an exogenous shock to bond trading infrastructure in a difference-to-difference framework to address endogeneity concerns and establish causality.\u0000\u0000\u0000Findings\u0000The paper documents a positive relationship between bond illiquidity and firms’ risk taking, specifically a one standard deviation increase in Amihud illiquidity measure is associated with nearly 20 percent increase in exploratory investments compared to CAPEX. The shift in risk taking in turn increases firms’ innovation output to some extent.\u0000\u0000\u0000Research limitations/implications\u0000The findings have important implications on firm’s risk taking and growth. The paper identifies a new channel through which firm’s choice of risk can be influenced, namely, bondholder disciplining. The study also has implications about externalities of trading beyond liquidity cost for regulators in designing market microstructure.\u0000\u0000\u0000Originality/value\u0000This is the first to study the disciplinary role of bond trading. Conventional wisdom holds that bondholders are passive creditors who do not engage in costly monitoring such as banks. The findings in this paper imply that this may not be the case.\u0000","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121828831","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 auditor in making a definite decision to use more than one rational considerations, based on the implementation of ethics policies are understood and made a fair decision. In addition, education and experience may also improve them competence in decision making. This research is used to analyze the effect of the research implementation of professional ethics and emotional intelligence to the auditor making decisions.
This study stores a sample of the independent auditors who are in public accounting in Semarang and BPK-RI branches of Central Java. The types of data used are primary data by collecting data that is an indirect interview or questionnaire. The analysis tool used is multiple linear regression.
The results of this study suggest that professional ethics are measured from indepence, integrity and objectivity; general standards and accounting principles; responsibility to clients 'significant influence auditors' decision making, while the responsibility to colleagues and other responsibilities and practices have no significant effect auditors in the decision-making. Emotional intelligence as measure from the self regulation, motivation and social skills have a significant effect on the auditor's in decision making, while the self-awareness and empathy no significant effect on the auditor decision making.
{"title":"The Effect of Implementing Professional and Intelligence Ethics Emotional on Decision Making for Auditors","authors":"William Hogianto, Handy Sebastian","doi":"10.2139/ssrn.3314994","DOIUrl":"https://doi.org/10.2139/ssrn.3314994","url":null,"abstract":"The auditor in making a definite decision to use more than one rational considerations, based on the implementation of ethics policies are understood and made a fair decision. In addition, education and experience may also improve them competence in decision making. This research is used to analyze the effect of the research implementation of professional ethics and emotional intelligence to the auditor making decisions.<br><br>This study stores a sample of the independent auditors who are in public accounting in Semarang and BPK-RI branches of Central Java. The types of data used are primary data by collecting data that is an indirect interview or questionnaire. The analysis tool used is multiple linear regression.<br><br>The results of this study suggest that professional ethics are measured from indepence, integrity and objectivity; general standards and accounting principles; responsibility to clients 'significant influence auditors' decision making, while the responsibility to colleagues and other responsibilities and practices have no significant effect auditors in the decision-making. Emotional intelligence as measure from the self regulation, motivation and social skills have a significant effect on the auditor's in decision making, while the self-awareness and empathy no significant effect on the auditor decision making.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"55 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131850306","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}
Innovative ideas can be gathered from many sources through crowdsourcing and open innovation approaches since these sources have expanded considerably owing to information and communication technologies. Innovation contests are one of the main tools to gather innovative ideas from different sources by open innovation approaches. Innovations that will provide solution to the problem of enterprises may emerge by gathering hundreds or even thousands of innovative ideas through these contests. The difficult part is the stage of selection of the best innovative idea alternative(s) by evaluating these ideas. In this study, a new multi-criteria approach is offered. In this approach primarily, alternatives which take lower score from the dominant or most important acceptance criteria are eliminated. Next, Weighted Sum and TOPSIS methods are used as multi-criteria decision methods among the remaining alternatives. After that, it is implemented one more step to show whether if the variation of weighted score of acceptance criteria affect the ranking order in each method. Hereby, a decision model proposal for innovation projects has been presented to make an alternative approach that allows both fast and correct decision making. Findings show that this method could be seriously considered as an alternative approach when there are lots of alternatives to make a decision in innovation projects.
{"title":"A New Multi-Criteria Decision Making Approach in the Evaluation of Innovative Ideas","authors":"Ahmet Çubukçu","doi":"10.2139/ssrn.3299917","DOIUrl":"https://doi.org/10.2139/ssrn.3299917","url":null,"abstract":"Innovative ideas can be gathered from many sources through crowdsourcing and open innovation approaches since these sources have expanded considerably owing to information and communication technologies. Innovation contests are one of the main tools to gather innovative ideas from different sources by open innovation approaches. Innovations that will provide solution to the problem of enterprises may emerge by gathering hundreds or even thousands of innovative ideas through these contests. The difficult part is the stage of selection of the best innovative idea alternative(s) by evaluating these ideas. In this study, a new multi-criteria approach is offered. In this approach primarily, alternatives which take lower score from the dominant or most important acceptance criteria are eliminated. Next, Weighted Sum and TOPSIS methods are used as multi-criteria decision methods among the remaining alternatives. After that, it is implemented one more step to show whether if the variation of weighted score of acceptance criteria affect the ranking order in each method. Hereby, a decision model proposal for innovation projects has been presented to make an alternative approach that allows both fast and correct decision making. Findings show that this method could be seriously considered as an alternative approach when there are lots of alternatives to make a decision in innovation projects.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"418 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131494583","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}
In the attraction effect, adding a dominated third option to a choice set of two options can reverse the preference for the original two options, and even increase one of the option’s choice share. This constitutes a violation of the axioms of regularity and independence from irrelevant alternatives, which are core properties of any choice model in which the utility of each option is stable across choice sets. Consequently, in the past 20 years, the attraction effect has driven the development of a set of influential models of multiattribute choice. However, Frederick, Lee, and Baskin (2014) have recently claimed that the attraction effect is only limited to options with numerical attributes, and does not hold for choices between naturalistic options (e.g., snacks, movies) — a claim which would severely undermine its theoretical importance. Huber, Payne, and Puto (2014) criticised Frederick et al.’s experiments, laying down a set of criteria that should be met by any experiment wishing to test for the attraction effect in real-world consumer choices. This article presents the first experiment that meets these criteria. The results show a precisely zero attraction effect.
{"title":"A Zero Attraction Effect in Naturalistic Choice","authors":"Anna Trendl, Neil Stewart, Timothy L. Mullett","doi":"10.2139/ssrn.3299524","DOIUrl":"https://doi.org/10.2139/ssrn.3299524","url":null,"abstract":"In the attraction effect, adding a dominated third option to a choice set of two options can reverse the preference for the original two options, and even increase one of the option’s choice share. This constitutes a violation of the axioms of regularity and independence from irrelevant alternatives, which are core properties of any choice model in which the utility of each option is stable across choice sets. Consequently, in the past 20 years, the attraction effect has driven the development of a set of influential models of multiattribute choice. However, Frederick, Lee, and Baskin (2014) have recently claimed that the attraction effect is only limited to options with numerical attributes, and does not hold for choices between naturalistic options (e.g., snacks, movies) — a claim which would severely undermine its theoretical importance. Huber, Payne, and Puto (2014) criticised Frederick et al.’s experiments, laying down a set of criteria that should be met by any experiment wishing to test for the attraction effect in real-world consumer choices. This article presents the first experiment that meets these criteria. The results show a precisely zero attraction effect.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130220859","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}
This study seeks to advance our understanding of how analysts’ decision contexts influence the motivational, attitudinal and relational aspects of their decision-making rationality. Based on in-depth interviews with analysts, and using the lens of the bounded rationality theory, we illustrate how the real-life complexity and ambiguity of analysts’ decision-making environment bounds the resource- and capacity-constrained analysts’ decision-making to that of satisficing. Satisficing transpires in both the means (i.e. process and mechanisms) and the ends (i.e. outputs and outcome) of their decision-making. We demonstrate how each context intensifies the impact of others, and is amplified further by analysts’ information environment, which strains analysts’ cognitive load. The revelations we provide about context-driven motivational, attitudinal and relational antecedents of analysts’ decision-making behaviour lead to a more holistic and nuanced understanding of analysts’ practice.
{"title":"Inside the Black-Box of Analysts’ Bounded Rationality: A Study of Contexts That Matter","authors":"S. Abhayawansa, M. Aleksanyan","doi":"10.2139/ssrn.3294232","DOIUrl":"https://doi.org/10.2139/ssrn.3294232","url":null,"abstract":"This study seeks to advance our understanding of how analysts’ decision contexts influence the motivational, attitudinal and relational aspects of their decision-making rationality. Based on in-depth interviews with analysts, and using the lens of the bounded rationality theory, we illustrate how the real-life complexity and ambiguity of analysts’ decision-making environment bounds the resource- and capacity-constrained analysts’ decision-making to that of satisficing. Satisficing transpires in both the means (i.e. process and mechanisms) and the ends (i.e. outputs and outcome) of their decision-making. We demonstrate how each context intensifies the impact of others, and is amplified further by analysts’ information environment, which strains analysts’ cognitive load. The revelations we provide about context-driven motivational, attitudinal and relational antecedents of analysts’ decision-making behaviour lead to a more holistic and nuanced understanding of analysts’ practice.","PeriodicalId":281936,"journal":{"name":"ERN: Other Microeconomics: Decision-Making under Risk & Uncertainty (Topic)","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132712862","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：