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Incorporating decision-makers' risk preferences into data-driven newsvendor models and developing machine learning methods to solve the models are the challenging problems addressed in this study. To consider different distributions and decision-makers' different risk preferences for the two losses of the total cost newsvendor model, the symmetrical, the partial symmetrical and the asymmetrical CVaR criteria are introduced. The regularisation, the primal-dual approach and the kernels in support vector machines are used to transform the data-driven risk-averse newsvendor problems under the CVaR criterion into the convex quadratic programming problems with good theoretical properties. Computational experiments are conducted on a real-world dataset. The models under the partial symmetrical and the asymmetrical CVaR criteria obtained good performances, but that under the symmetrical CVaR criterion suffered the underfitting problem. Two factors including the degrees of risk aversion for the two losses in the total cost newsvendor model and the empirical errors of data-driven models affect order decisions. The degrees of risk aversion for the two losses have anti-directional effects on order quantities. The introduction of asymmetrical CVaR criterion paves a new way to reveal the effects of different risk references for different losses on order decisions, and has the potential to improve newsvendor decisions. [ABSTRACT FROM AUTHOR]

The cause-and-effect relationship between incentives and market research response rates is well documented. In general, we understand that - mediated by factors such as privacy and difficulty - the greater the compensation offered to participants, the greater propensity for task completion. However, there is little understanding of how the way in which an incentive is communicated impacts results. We believe studying this field will help insight industry practitioners who are often challenged by limited or fixed incentive budgets. By exploring and ranking framing methods, we aim to recommend to researchers the tactical options that will maximise return on investment. In this initial exploration, we have narrowed framing choices to a set identified by the field of behavioural economics. In particular, we investigate the relative impact of: (1) financial incentives, (2) the endowment effect, (3) social proof, (4) altruism and, (5) financial incentives plus loss aversion. These conditions can be considered to broadly fit within one of three categories: (a) financial incentives alone, (b) behavioural principles alone, (c) financial incentives plus behavioural principles. To replicate the real-world challenges of insight professionals, this was tested in an experimental design that sought to recruit existing Aegon customers into a new research panel. The experimental case study format also lends itself to high volumes. The results of this study are based on 91,289 recruitment emails delivered to Aegon customers across various weekday mornings. Each email contained either neutral information regarding the incentive to join - the opportunity to win up to £250 - or the same message framed using one of the experimental methods in test. Messages were repeated both in the subject line and the email body. Results were measured and analysed at the points of: (A) email open, (B) email click, (C) conversion as defined by screener completion, (D) conversion as defined by panel account created, and (E) engagement as defined by completing at least one task on the panel eligible for a point reward within 3 months of signup. Additionally, the unsubscribe rate was measured and compared across all messages. Prior to the launch of the study, our hypotheses were that email communications which utitlised the endowment effect, social proof or altruism would lead to higher conversion rates than messages regarding incentivisation. Further, we hypothesised that emails which utilised both financial incentives plus loss aversion framing in an additive capacity would deliver the highest conversion rate. Our analysis led to a rejection of all hypotheses. Ultimately, it was concluded that none of the tested framing effects performed significantly better, as per chi-squared tests, than the financial incentive group across open rate, click rate, conversion rate or engagement rate. However, the addition of loss aversion performed on par with the incentive only group for panel engagement. Further, the use of loss aversion, altruism and the endowment effect all led to significantly lower unsubscribe rates than the incentive only group. This led to a nuanced conclusion which surmised that the loss aversion tactic, when used in an additive capacity to a financial incentive, appears to offer the most balanced risk profile for research professionals, whilst the endowment effect, social proof and altruism offer moderate to worse risk profiles. Finally, we highlight the need for more proof in this field - suggesting that future efforts replicate the study with a general population sample or non-financial services case studies. [ABSTRACT FROM AUTHOR]

We study the Tullock contest model with loss aversion and endogenously formed reference points. In a contest with n possibly heterogeneous players and convex effort costs, we establish sufficient conditions for a unique Nash equilibrium in pure strategies. Subsequently, we analyze the impact of loss aversion on players' spending behavior, probability of winning, and rent dissipation. [ABSTRACT FROM AUTHOR]

We develop and implement methods for determining whether introducing new securities or relaxing investment constraints improves the investment opportunity set for prospect investors. We formulate a new testing procedure for prospect spanning for two nested portfolio sets based on subsampling and linear programming. In an application, we use the prospect spanning framework to evaluate whether well-known anomalies are spanned by standard factors. We find that of the strategies considered, a few of them expand the opportunity set of the prospect type investors and thus have real economic value for them and involve absence of loss aversion. Those are the net stock issue anomaly under the FF-5 model, the momentum and net stock issue anomalies under the M-4 model, and the momentum anomaly under the q model. In-sample and out-of-sample results prove remarkably consistent in identifying genuine anomalies for prospect investors. This paper was accepted by Will Cong, finance. Supplemental Material: The data and online appendix are available at https://doi.org/10.1287/mnsc.2023.4953. [ABSTRACT FROM AUTHOR]

Introduction: Previous empirical research in the social sciences suggests sizable differences across religious denominations for various outcomes of interest, such as educational attainment, marital stability, wealth, or fertility. A small body of previous experimental literature has investigated possible differences in economic preference parameters (including time preference and risk attitude) between religious denominations that might explain those differences. Methods: This research adds to the extant literature on religion and preferences by including information on subjects' Big Five personality traits and analyzing potential correlations with loss aversion. It combines experimental data from incentivized choices with information on religious affiliation during high school and Big Five personality traits to test for possible correlations of religious denomination with risk attitude, time preference, and loss aversion, using Bayesian analysis of variance (ANOVA) and Bayesian regression analysis. Results: Bayesian ANOVA results suggest no preference differences between the religions analyzed in this research. When controlling for Big Five personality traits and a host of other background variables, Bayesian regression results suggest no effects of either religious affiliation or Big Five personality traits measures on the three economic preference parameters analyzed here. Discussion: These findings highlight the complexity of the relationship between religion, personality traits, and economic preference parameters, suggesting that previously observed differences may be influenced by the preference measures used or other unobserved factors. [ABSTRACT FROM AUTHOR]

South African subsistence livestock farmers rely heavily on traditional mitigation and coping mechanisms to deal with the effects of drought. However, these methods have proven ineffective in managing the full impact of drought. Consequently, policymakers are increasingly interested in promoting Index-based Pasture Insurance (IBPI). This paper aims to assess subsistence livestock farmers' preferences for IBPI. A simple random sampling method was used to select 110 subsistence livestock farmers for data collection. A discrete choice experiment—Conditional Logit and Latent Class models and incentivized lottery games were used to elicit preferences for insurance contracts and loss aversion. The findings indicate that subsistence livestock farmers have a favourable attitude toward IBPI contracts that protect against drought-related pasture degradation. The Conditional Logit model shows that farmers prefer transparent contracts that reimburse with feed and vouchers rather than cash. However, they derive negative marginal utility from basis risk and premium. However, the Latent Class model reveals heterogeneous preferences for IBPI among farmers. Farmers are also loss-averse, but loss aversion did not influence their preference for IBPI. Therefore, the primary recommendation for insurance providers is to consider customizing IBPI attributes to increase adoption among subsistence farmers. [ABSTRACT FROM AUTHOR]

Understanding how objective quantities are translated into subjective evaluations has long been of interest to social scientists, medical professionals, and policymakers with an interest in how people process and act on quantitative information. The theory of decision by sampling proposes a comparative procedure: Values seem larger or smaller based on how they rank in a comparison set, the decision sample. But what values are included in this decision sample? We identify and test four mechanistic accounts, each suggesting that how previously encountered attribute values are processed determines whether they linger in the sample to guide the subjective interpretation, and thus the influence, of newly encountered values. Testing our ideas through studies of loss aversion, delay discounting, and vaccine hesitancy, we find strongest support for one account: Quantities need to be subjectively evaluated—rather than merely encountered—for them to enter the decision sample, alter the subjective interpretation of other values, and then guide decision making. Discussion focuses on how the present findings inform understanding of the nature of the decision sample and identify new research directions for the longstanding question of how comparison standards influence decision making. [ABSTRACT FROM AUTHOR]

This paper examines the predictions of expectations-based reference-dependent models for risk-apportionment tasks that elicit higher-order risk attitudes. We consider some of the most commonly used specifications of Kőszegi and Rabin (2006, 2007) and disappointment aversion models. Our analysis reveals that higher order risky choices exhibited by decision makers defined by those model specifications depend on whether risks to be apportioned in these tasks are symmetric or asymmetric, whether they include small probability outcomes, and on the level of loss aversion. We highlight that some of the predicted choice behaviour in the risk-apportionment tasks differs from the ones in alternative models of decision under risk. We employ experimental data to examine whether choice patterns in the risk apportionment tasks are in line with the predictions of the model specifications described here. We find that only a small proportion of them are consistent with those predictions. [ABSTRACT FROM AUTHOR]

The status-quo bias (SQB) is the tendency to stick with the current situation despite potential dissatisfaction. In this study, we explore the relationship between SQB and subjective well-being (SWB). We hypothesized that higher SQB may lead to less desirable situations (e.g., unsatisfactory marriage, unwanted job), negatively affecting SWB. We developed and examined a novel index for measuring SQB. Surveying 1,423 Israeli working adults, the index showed strong internal consistency and validity, affirming reliability and construct validity. A significant negative correlation between SQB and three SWB measures was found, with SQB explaining more to SWB variations than subjective health, income, and religion combined. Positive life changes over the past three years have moderated this relationship. Moreover, despite including factors like regret, present bias, loss aversion, and optimism—which correlate with SWB and SQB in opposite directions and, therefore, could nullify our findings—the SQB-SWB correlation remained robust. Furthermore, our SQB measure significantly predicted SWB even when controlling for the negative relationship between the affective component of SWB (i.e., emotions) and SQB, which was demonstrated to operate in reverse causality compared to our hypothesis. In other words, SQB was found to mediate between the affective component and the other components of SWB. By providing evidence of the correlation between SQB and SWB, we introduce a robust SQB measurement tool, and underscore SQB's importance when exploring SWB determinants, suggesting that policy interventions encouraging individuals to overcome barriers to change could be advantageous. [ABSTRACT FROM AUTHOR]

This document is a collection of abstracts from various presentations and studies on team communication and collaboration, highlighting the importance of effective communication in team dynamics and its impact on team performance and mental health. The abstracts cover topics such as mapping communication in teams, team coaching's impact on mental health, creating psychologically healthy veterinary teams, effective communication in cybersecurity, and the characteristics of high-performing teams. The studies emphasize the need for strategies to enhance team communication and collaboration in different fields. Another study examines the influence of parenting behavior on entrepreneurial intentions, suggesting that parenting behavior affects individuals' self-compassion, fear of failure, and willingness to start a business. The study proposes that self-compassion interventions can improve self-compassion levels, reduce fear of failure, and enhance entrepreneurial intentions. Additionally, a study explores the relationship between system justification beliefs and perceived income inequality across 40 societies, finding that stronger beliefs in meritocracy and equality of opportunities are associated with perceiving income inequality as less severe. Cultural orientations and economic development levels were found to moderate this relationship. Lastly, a study investigates the impact of top-management communication on organizational productivity, identifying various distortion styles in interpretations of organizational reality. These distortion styles can lead to moral disengagement, guilt, and closed-mindedness within organizations. [Extracted from the article]

Summary: The traces of marks left by human bodies on surviving archaeological artefacts can be a rich and informative source for understanding everyday individuals and their practices in the past. Nevertheless, such traces have tended to be neglected or generalized in archaeology, in favour of elite artefacts and manufacturing statistics – or in pursuit of 'clean', forensically amenable evidence, e.g. dry fingerprints. Using two case studies from Bronze Age Crete, this paper calls for an attitudinal, as much as a methodological, shift in how we exploit the remnants of gestural preferences, limitations and mistakes which we have hitherto chosen to dismiss. I argue that, if we want to understand nameless individuals of past societies, we need to overcome our implicit aversion to the mundane and everyday and to find new ways of exploring the 'messy', inconvenient, but also abundant fleeting moments of bodies no longer extant. [ABSTRACT FROM AUTHOR]

This study evaluates details of a progressive transportation development model, wherein high occupancy vehicle (HOV) lanes are transformed into high-occupancy toll (HOT) lanes. Although the management strategy of HOT lanes has been implemented for many years, the implementation of HOT lanes is limited in many regions, and thus, many people remain unfamiliar with the concept. This study aims to evaluate travelers' willingness to pay for HOT lanes based on a "low application" scenario in Shenzhen, China, wherein some HOV lanes are present and may potentially be transformed into HOT lanes, but not all area residents are aware of their intended purpose. According to the Diffusion of Innovation Theory, we leverage this situation to conduct a survey of perceptions and attitudes toward the HOT lanes and evaluate how these perspectives may translate to HOT lane utilization. We further proposed a hybrid utility and regret model considering the impacts of loss aversion caused by tolls or coordinated carpooling for single occupancy vehicles to explore relationships between travel behavior and surveyed demographic and socio-economic characteristics in the context of HOT lanes in places where they are unfamiliar. A sensitivity analysis is conducted to characterize any apparent changing influences. The results show that the model considering decision regret performs well, especially in the scenario with low tolls. Nearly 80% of travelers are willing to pay tolls for HOT lanes, even with limited prior exposure to the concept. The increased acceptance of HOT lanes can be expected to hurt total toll revenue, which may be triggered by easier access to carpool partners associated with the free pass. The study informs a deeper understanding of travelers' willingness to pay for HOT lanes and helps policy-makers develop differentiated tolling strategies. • The willingness to pay for HOT lanes is studied under the low application. • Loss due to unfamiliarity is integrated with the analysis of willingness to pay. • The willingness to pay supports differentiated spatiotemporal tolling policies. • Nearly 80% of travelers are willing to pay tolls, even with the limited concept. • Reduced travel time has the most significant impact on the HOT lane advantage. [ABSTRACT FROM AUTHOR]

Utilizing a national individual‐level medical dataset and the home bias phenomenon in investment, our study shows a strong and robust link between declines in local stock returns and increased antidepressant consumption among investors. This effect intensifies in areas with higher per capita dividend income, suggesting a direct relationship between higher stock ownership and stronger responses. We confirm that portfolio losses, not local economic conditions, are responsible for increased antidepressant usage during market downturns. Using the frequency of psychotherapy sessions yields similar findings. Moreover, our study supports the loss aversion hypothesis as we find positive stock returns do not influence antidepressant usage. [ABSTRACT FROM AUTHOR]

This study formulates a theoretical framework to shed light on why cash grants fail to increase parental investment in child education, and what can be done to address the issue. The paper asserts that consumption vulnerability, loss aversion, and information friction render lump‐sum cash grants ineffective. Redesigning interventions as demand‐side cost‐sharing schemes would nudge parents to buy educational materials for their children. [ABSTRACT FROM AUTHOR]

Loss aversion is a psychological construct defined as a tendency to value potential losses more than gains in a situation that requires decision-making. The Loss Aversion Scale (LAS, eight items) measures an individual’s loss aversion to various situations. However, the generalization of its psychometric properties to different population groups is unknown. This study aimed to validate the LAS instrument for use among Spanish university adults. To this end, two studies were conducted: a content validity study calculating the substantive validity (N = 24) of the instrument’s translation from original English to Spanish and a study of internal structure and association (N = 766) among Spanish university men and women aged 18–35. The analyses performed for each sample indicated that the instrument had adequate validity and reliability values as a one-dimensional measure; however, items 5 and 8 had to be removed. Their scores indicated moderate-magnitude correlations with social desirability. This article debates the study’s limitations, practical implications, and future lines of research based on the results. The conclusion is that the Loss Aversion Scale instrument suits general Spanish population samples and requires probable methodological control concerning social desirability. [ABSTRACT FROM AUTHOR]

This article explores the behavioral implications of different roles of the reference alternative. We delineate the boundaries of three reference-dependent choice models, each associated with distinct behavioral patterns: the endowment effect model, the loss aversion model, and the reference-dependent shortlisting model. Furthermore, we demonstrate that the intersections of these models correspond to meaningful special cases within each model. [ABSTRACT FROM AUTHOR]

Purpose- This study is conducted to determine the impact of behavioral biases on individuals' investment decisions. The focus is to directly analyze behavioral factors' impact on retail investors' investment decisions, as individuals generally neither have in-depth knowledge nor the expertise to make effective decisions, and they do not understand the behavioral biases affecting their decisions. Study Design/methodology/approach- It is a primary study, and the relationships are developed using structural equation modeling. The respondents of the study are the retail individual security market investors of Pakistan. The instrument's reliability and validity were checked with a small sample before data collection. This study also employs a moderating variable of financial literacy to determine the impact of behavioral biases and financial decisions with the mediation of risk perception. SmartPLS is used to find out the impact. Findings- The results show that moderator financial literacy significantly affects the relationship between behavioral biases and investment decisions. Similarly, the mediation effect of risk perception is also found significant. Except for loss aversion, all the independent variables significantly impacted investment decision-making. The findings of previous studies support the results. Research Implications- This study has incorporated four behavioral biases, which are the most common of these. Hence, the findings can benefit individual investors in making financial decisions by reducing these biases, improving financial literacy, and developing a better understanding of risk. Future researchers may check the impact of other biases and study these for institutional investors. Originality/value- The originality of this study is well-supported by the fact that it is primary research. Most individual investors decide on available fundamental and technical data, ignoring behavioral biases in investment decision-making. Moderated mediation is the missing link addressed in this research. [ABSTRACT FROM AUTHOR]

People tasked with replacing a departing group member are disproportionately likely to choose a replacement with the same demographic identity, leading to demographic "stickiness" in group composition. We examine this effect in 2,163 U.S. federal judge appointments over 75 years, in the selection of 5,616 S&P 1500 board directors from 2014 to 2019, and in four preregistered experiments (n = 2,900). The patterns we document are generally consistent with both impact aversion (desires to minimize changes to group composition and dynamics) and diversity loss aversion (outsized concerns about losing ground on demographic diversity relative to interests in gaining ground). Ultimately, our results suggest that replacement decisions are influenced by loss-averse preferences regarding the demographic identities of departing group members. The propensity to choose new group members based on whether they demographically resemble their predecessors suggests that once progress toward diversification has occurred, it should be "sticky," so backsliding is less likely than might otherwise be expected. An optimistic outlook is that one-time interventions to change group composition may have a lasting impact, and change agents committed to diversification may have enduring effects on equality beyond their tenure. This paper was accepted by Yuval Rottenstreich, behavioral economics and decision analysis. Supplemental Material: The data files and online supplement are available at https://doi.org/10.1287/mnsc.2023.4897. [ABSTRACT FROM AUTHOR]

In a complete market, we find optimal portfolios for an investor whose satisfaction stems from both a payoff's intrinsic utility and its comparison with an endogenous reference as modeled by Kőszegi and Rabin. In the regular regime, arising when reference dependence is low, the marginal utility of the optimal payoff is proportional to a twist of the pricing kernel. High reference dependence leads to the anchors regime, whereby investors reduce disappointment by concentrating significant probability in one or few fixed outcomes, or "anchors." Multiple equilibria arise because anchors may not be unique. If stocks follow geometric Brownian motion, the model implies that investors with longer horizons choose larger stocks holdings. [ABSTRACT FROM AUTHOR]

Decision makers often prefer safe wins over risky gambles, even if the latter promise higher payoffs than the former. One mechanism that explains this choice pattern is the certainty effect, whereby probabilities of 0 and 1 are interpreted accurately but intermediate probabilities are distorted by diminishing sensitivity. We tested an alternative explanation that was recently proposed, the idea that people would be motivated by avoiding zero outcomes rather than being attracted to sure gains. This zero‐outcome aversion in gain‐domain choices was called the zero effect. By analogy, we proposed that decision makers would approach zero outcomes in the loss domain. Two eye‐tracking experiments investigated visual attention as a key component of the zero effect in the gain domain (Experiment 1) and the loss domain (Experiment 2). Choices were consistent with the zero effect. In the gain domain, gambles were chosen less frequently if they included a zero outcome. In contrast, zero‐outcome gambles were chosen more frequently in the loss domain. Eye movements and pupillometry indicated that zero outcomes in both domains (a) were less frequently fixated than other outcomes and (b) were associated with increased arousal. We concluded that domain‐specific affective responses to zero outcomes aligned with approach/avoidance motivation. These distinct motivations in turn biased information search and choice behavior. [ABSTRACT FROM AUTHOR]

Abstract Loss aversion is a psychological construct defined as a tendency to value potential losses more than gains in a situation that requires decision-making. The Loss Aversion Scale (LAS, eight items) measures an individual’s loss aversion to various situations. However, the generalization of its psychometric properties to different population groups is unknown. This study aimed to validate the LAS instrument for use among Spanish university adults. To this end, two studies were conducted: a content validity study calculating the substantive validity (N = 24) of the instrument’s translation from original English to Spanish and a study of internal structure and association (N = 766) among Spanish university men and women aged 18–35. The analyses performed for each sample indicated that the instrument had adequate validity and reliability values as a one-dimensional measure; however, items 5 and 8 had to be removed. Their scores indicated moderate-magnitude correlations with social desirability. This article debates the study’s limitations, practical implications, and future lines of research based on the results. The conclusion is that the Loss Aversion Scale instrument suits general Spanish population samples and requires probable methodological control concerning social desirability.

Purpose: This paper aims to identify the impacts of sociodemographic covariates on behavioural biases (BB) scores; the psychometric evidence of the BB measurement instruments; and the main BB that influences the decision-making of individual investors. Design/methodology/approach: Papers were retrieved through search using keywords in ten databases. This systematic review is based on 69 peer-reviewed papers, most of which were published between 2017 and 2021. The relevance of the included papers was assessed through the analysis of statistical/psychometric methods used, and content analysis of the BB literature and its sociodemographic correlations. Findings: Overconfidence is higher in men and not related to age. There was no consensus regarding the relationship between BB and other sociodemographic variables. Most measuring instruments are ad hoc, showing ≤ 4 types of psychometric evidence and assessing ≤ 9 BB. Therefore, the findings demonstrate that there is no gold standard instrument for measuring investors' BB. Furthermore, 37 BB were cited as influencers of individual investors' decision-making and overconfidence, herding, anchoring, representativeness and loss aversion were the most prevalent. Research limitations/implications: Considering that very few systematic reviews have been published in the behavioural finance area, this paper highlights the current state-of-the-art and identifies significant gaps in the literature that can be explored by further research. Originality/value: To the best of the authors' knowledge, this is the first systematic review that analyses the psychometric properties of instruments used for individual investors BB assessment. [ABSTRACT FROM AUTHOR]

Abstract Traditional methods for evaluating decision-making provide valuable insights yet may fall short in capturing the complexity of this cognitive capacity, often providing insufficient for the multifaceted nature of decisions. The Kalliste Decision Task (KDT) is introduced as a comprehensive, ecologically valid tool aimed at bridging this gap, offering a holistic perspective on decision-making. In our study, 81 participants completed KDT alongside established tasks and questionnaires, including the Mixed Gamble Task (MGT), Iowa Gambling Task (IGT), and Stimulating & Instrumental Risk Questionnaire (S&IRQ). They also completed the User Satisfaction Evaluation Questionnaire (USEQ). The results showed excellent usability, with high USEQ scores, highlighting the user-friendliness of KDT. Importantly, KDT outcomes showed significant correlations with classical decision-making variables, shedding light on participants’ risk attitudes (S&IRQ), rule-based decision-making (MGT), and performance in ambiguous contexts (IGT). Moreover, hierarchical clustering analysis of KDT scores categorized participants into three distinct profiles, revealing significant differences between them on classical measures. The findings highlight KDT as a valuable tool for assessing decision-making, addressing limitations of traditional methods, and offering a comprehensive, ecologically valid approach that aligns with the complexity and heterogeneity of real-world decision-making, advancing research and providing insights for understanding and assessing decision-making across multiple domains.

Objectives: To synthesize qualitative evidence on the experience of lay responders performing cardiopulmonary resuscitation (CPR). Methods: Qualitative evidence synthesis was performed using the Thomas and Harden method. The PubMed, Cochrane Library, Web of Science, OVID Medline, Embase, CINAHL, CNKI, and WanFang databases were systematically searched. The quality of the research was assessed by the Critical Assessment Skills Program Tool (CASP). Results: A total of 5,610 studies were identified, and 9 studies were included in the analysis. Four analytical themes were generated: emotional ambivalence before CPR, psychological tolerance during CPR, perceived experience after CPR, and enhancing psychological resilience. Conclusion: Lay responders face complicated psychological experience during CPR, which may be susceptible to psychological effects such as "loss aversion," "bystander effects" and "knowledge curse." In addition to the timely retraining of CPR, lay responders should be instructed to manage psychological distress and improve psychological resilience. More importantly, the psychological sequelae may be long-lasting, requiring ongoing psychological intervention and follow-up based on valuing transdisciplinarity across endeavours. [ABSTRACT FROM AUTHOR]

Understanding and acting upon risk is notably challenging, and navigating complexity with understandings developed for stable environments may inadvertently build a false sense of safety. Neglecting the potential for non-linear change or "black swan" events - highly impactful but uncommon occurrences - may lead to naive optimisation under assumed stability, exposing systems to extreme risks. For instance, loss aversion is seen as a cognitive bias in stable environments, but it can be an evolutionarily advantageous heuristic when complete destruction is possible. This paper advocates for better accounting of non-linear change in decision-making by leveraging insights from complex systems and psychological sciences, which help to identify blindspots in conventional decision-making and to develop risk mitigation plans that are interpreted contextually. In particular, we propose a framework using attractor landscapes to visualize and interpret complex system dynamics. In this context, attractors are states toward which systems naturally evolve, while tipping points - critical thresholds between attractors - can lead to profound, unexpected changes impacting a system's resilience and well-being. We present four generic attractor landscape types that provide a novel lens for viewing risks and opportunities, and serve as decision-making contexts. The main practical contribution is clarifying when to emphasize particular strategies - optimisation, risk mitigation, exploration, or stabilization - within this framework. Contextappropriate decision making should enhance system resilience and mitigate extreme risks. [ABSTRACT FROM AUTHOR]

Traditional methods for evaluating decision-making provide valuable insights yet may fall short in capturing the complexity of this cognitive capacity, often providing insufficient for the multifaceted nature of decisions. The Kalliste Decision Task (KDT) is introduced as a comprehensive, ecologically valid tool aimed at bridging this gap, offering a holistic perspective on decision-making. In our study, 81 participants completed KDT alongside established tasks and questionnaires, including the Mixed Gamble Task (MGT), Iowa Gambling Task (IGT), and Stimulating & Instrumental Risk Questionnaire (S&IRQ). They also completed the User Satisfaction Evaluation Questionnaire (USEQ). The results showed excellent usability, with high USEQ scores, highlighting the user-friendliness of KDT. Importantly, KDT outcomes showed significant correlations with classical decision-making variables, shedding light on participants' risk attitudes (S&IRQ), rule-based decision-making (MGT), and performance in ambiguous contexts (IGT). Moreover, hierarchical clustering analysis of KDT scores categorized participants into three distinct profiles, revealing significant differences between them on classical measures. The findings highlight KDT as a valuable tool for assessing decision-making, addressing limitations of traditional methods, and offering a comprehensive, ecologically valid approach that aligns with the complexity and heterogeneity of real-world decision-making, advancing research and providing insights for understanding and assessing decision-making across multiple domains. [ABSTRACT FROM AUTHOR]

In recent years, a lot of empirical effort has been made to search for potential nonlinear responses of house prices to various demand and supply factors. This paper examines Poland's heterogeneous regional housing market reactions to key economic variables from 2000 to 2022. The study raises two research questions related to the asymmetric adjustment of housing markets to selected demand and supply shocks. Firstly, we ask whether the house price adjustments to negative shocks are relatively minor (for example, during an economic downturn) when compared to positive shocks (prevalent in booming markets), mainly due to the loss aversion behavior theory and nominal rigidity of house prices. In particular, we test the hypothesis that house prices react more to positive impulses from supply and demand than negative ones. Secondly, we investigate whether market reactions are similar for large and small metropolitan markets. The second hypothesis posits that metropolitan housing markets adjust asymmetrically to demand and supply shocks based on the city size (population and housing stock in a given city). The study uses a nonlinear ARDL model to test the research hypotheses empirically. This paper provides new insights into the nonlinear reactions of house prices to exogenous shocks and adds to the limited empirical evidence from less developed economies. [ABSTRACT FROM AUTHOR]

In the realm of investment decisions, the influence of behavioral biases has emerged as a captivating area of exploration. This article embarks on a comprehensive journey through the landscape of behavioral biases in investment choices, delving into their profound impact on financial markets. Contrary to traditional finance theories assuming rationality, a multitude of empirical evidence attests to the pervasive effects of cognitive and emotional biases. Through an extensive literature review, this article elucidates the intricacies of key biases such as overconfidence, loss aversion, anchoring, confirmation bias, herding behavior, disposition effect, framing effects, and regret aversion. By examining the distinct ways these biases distort investors' judgment and decision-making processes, we unveil the often unexpected deviations from rationality. Each bias, rooted in human psychology, can lead to suboptimal investment behaviors, portfolio misalignments, and heightened market volatility. However, recognizing the impact of these biases provides opportunities for transformative insights. As investment professionals, policymakers, and individuals alike comprehend the subtle nuances of behavioral biases, tailored interventions, educational initiatives, and adaptive strategies can be devised to mitigate their adverse effects. This article not only synthesizes the prevailing research but also charts a course for future investigations. The implications of understanding and addressing behavioral biases extend beyond financial realms, offering a bridge between finance and psychology. As interdisciplinary collaboration gains momentum, pathways for future research become evident, beckoning scholars to delve deeper into the uncharted territories of human behavior and its intricate relationship with investment decisions. Through the exploration of these biases and their potential remedies, this article illuminates the evolving landscape of investment decision-making in a world where cognitive fallacies intersect with financial choicest. [ABSTRACT FROM AUTHOR]

I argue that psychology can learn from the natural sciences and focus on the weight that physics attributes to precise theories. Much of psychology can be increasingly characterized by theory aversion—yet not the kind motivated by positivism. Theory aversion in psychology arises from a conflict between two desires: to come up with a theory, and to avoid the necessary mental effort and time as well as the risk of refutation. The results are ersatz theories, or surrogates. I outline three common, but independent, research practices that avoid building precise theories of psychological processes: the null ritual, which allows researchers to get away with not specifying their research hypothesis; as-if theories, which refrain from modeling psychological processes; and lists of binary oppositions, as in dual-system theories, which consist of vague dichotomies. Psychologists could learn from physics to walk forward on two feet—theory and experiment—rather than hobble on one. [ABSTRACT FROM AUTHOR]

In a sequential model of vertical product differentiation in which consumers are loss-averse, I analyse how firms compete to sell the reference product when they set prices. I find that there are two subgame perfect equilibria: one where the reference point for all consumers is the higher-quality product; and the other where the reference point is the lower-quality product. However, applying the risk-dominance criterion, I obtain that the sole risk-dominant equilibrium is for the higher-quality firm to sell the reference product. Since the hedonic price of the higher-quality product is the highest, consumers do not suffer any psychological disutility in the risk-dominant equilibrium. [ABSTRACT FROM AUTHOR]

Loss aversion is one of the most widely used concepts in behavioral economics. We conduct a large-scale, interdisciplinary meta-analysis to systematically accumulate knowledge from numerous empirical estimates of the loss aversion coefficient reported from 1992 to 2017. We examine 607 empirical estimates of loss aversion from 150 articles in economics, psychology, neuroscience, and several other disciplines. Our analysis indicates that the mean loss aversion coefficient is 1.955 with a 95 percent probability that the true value falls in the interval [1.820, 2.102]. We record several observable characteristics of the study designs. Few characteristics are substantially correlated with differences in the mean estimates. (JEL D81, D91) [ABSTRACT FROM AUTHOR]

This paper incorporates reference‐dependent preferences into a consumption‐based asset pricing model featuring Epstein–Zin utility. Three relevant results emerge from this extension. First, agents prefer the late resolution of uncertainty in recursive utility. Second, the late resolution of uncertainty helps replicate the downward‐sloping term structure of market excess return. Third, the intertemporal substitution elasticity is more sensitive to asset prices through increasing precautionary saving motivations. A closed‐form solution for the proposed model largely explains (i) high, volatile, and countercyclical equity premiums; (ii) low risk‐free rates; and (iii) the downward‐sloping term structure of equity premiums and variance ratios. [ABSTRACT FROM AUTHOR]

The study's purpose is to examine the effect of herding, loss aversion, overconfidence, and fear of missing out (FOMO) biases on crypto investors' investment decisions. The study also looks at how FOMO plays a mediating role between herding, loss aversion, overconfidence, and crypto investment decisions. To acquire data from crypto retail investors, the study used a questionnaire survey. A total of 473 responses were gathered and analyzed with SmartPLS. To achieve the study's aims, factor analysis and partial least square structural equation modelling were used. The study's findings found that FOMO, herding, loss aversion, and overconfidence biases have a substantial effect on the investment decisions of crypto investors, in respective order. In addition, FOMO bias establishes a complementary partial mediation on the relationship between herding, loss aversion, and crypto investors' decision-making behavior. Ergo, the present study assisted individual and institutional cryptocurrency investors, crypto portfolio managers, policymakers, researchers, and market regulators in broadening their knowledge base about cryptocurrency and forecasting investors' behavior. Hence, this study contributes to the field of behavioral finance. [ABSTRACT FROM AUTHOR]

E-commerce businesses have been developing new ways of engaging customers in the online service recovery process to realise value co-creation. Such practices have been facilitated by the rapid development of information and communication technology. However, scant research has been conducted on these changes. To bridge this research gap, we explain how the application of technology guides and shapes customers' responsibilities in online service recovery by constructing the concept of technology-driven mandatory customer participation (MCP), which is a new recovery strategy from the perspective of technology affordance. Moreover, we propose a comprehensive model to explain the influence mechanism of technology-driven MCP on value co-creation. Two sequential studies were then conducted. The first was an initial qualitative study based on interviews with e-commerce practitioners in China, in which three factors of technology-driven MCP (physical, mental, and emotional) and two categories of loss (utilitarian and symbolic) were identified. The second quantitative study explored and validated the relationships between technology-driven MCP, perceived co-creation, experienced burnout, and online post-recovery satisfaction from a loss-aversion perspective. The theory-driven empirical findings provide recommendations for e-commerce businesses to enhance online service management. [ABSTRACT FROM AUTHOR]

Evaluating and selecting appropriate contractors is critical to the success of specific construction projects in the building industry. Existing approaches for addressing this problem are unsatisfactory due to the ignorance of the multi-dimensional nature of the evaluation process and inappropriate consideration of existent risks. This study presents a DEA game cross-efficiency model with loss aversion for evaluating and selecting specific contractors. The competitiveness of the evaluation process is modeled using game theory with respect to the adoption of the cross-efficiency model. The attitude of the decision maker toward risks is tackled with the use of loss aversion, which is a phenomenon formalized in prospect theory. As a result, the proposed approach can adequately screen available contractors through prequalification and adequately consider the attitude of the decision maker toward risks, leading to effective decisions being made. An example is presented to demonstrate the applicability of the proposed model in evaluating and selecting appropriate contractors for specific construction projects. The results show that the proposed model is effective and efficient in producing a unique solution for contractor selection through appropriate modeling of the multi-dimensional contractor selection process and adequate consideration of the competition between the contractors and the attitude of the decision maker toward risks in practical situations. [ABSTRACT FROM AUTHOR]

Behavioral and biological addictions can impair decision-making processes, mainly by means of a dysfunction in brain regions associated with reward and frontal areas that may lead to disadvantageous choices. Understanding these differences helps establish appropriate terminology and enhances our ability to recognize, prevent, and treat these disorders effectively. Thus, while behavioral and biological addictions share some common elements, their underlying mechanisms and impact on decision-making vary significantly. Moreover, decision-making can be measured through questionnaires (stable or "cold" measures) or dynamic tasks (hot decisions) such as the Iowa Gambling Task (IGT), which can reflect different dimensions of this process. The aim of this study was to compare decision-making from different perspectives—stable and dynamic measures—in patients with gambling addiction (GA) (n = 42) and patients with biological addictions (BA) (n = 43). Decision-making was assessed using GDMS (Decisional Styles) and the LCT (Loss Aversion), as cold decision-making measures, as well as a hot or situational task called the IGT (Iowa Gambling Task). The results revealed that GA patients exhibited lower rational style scores compared to BA patients. Additionally, GA patients showed greater loss aversion according to the LCT questionnaire. On the other hand, when analyzing the IGT results, no differences were observed between groups in the overall IG index, learning curves, or the loss aversion parameter. However, GA patients showed higher sensitivity to feedback and less consistency in their decisions. These findings highlight the differences between different types of addictions and highlight the importance of considering the type of measure used to evaluate decision-making. [ABSTRACT FROM AUTHOR]

Student mobility has grown substantially in the past decades. Study abroad opportunities provide long-lasting advantages for students but, at the same time, represent complex decisions for applicants, usually involving a high degree of uncertainty. This paper aims to obtain a deeper understanding of study-abroad decision-making in higher education by combining marketing and behavioral economics perspectives. The authors conducted in-depth interviews with North African scholarship holders and adapted the customer journey framework to a study abroad decision context. Three stages of the customer journey were considered: the pre-application stage, the application stage, and the post-admittance stage. Loss aversion, group identification, social norms, endowment effects, and priming, as core concepts from behavioral economics, were identified and enriched the practical implications of the customer journey framework. Higher education institutions may benefit from our findings when designing their communication and recruiting strategies. [ABSTRACT FROM AUTHOR]

We investigate the optimal design of incentives when agents exhibit reference dependence. The theoretical framework of this paper incorporates the most prominent accounts of reference-dependent preferences and the most frequently used reference point rules. Such a general treatment of preferences allows us to characterize sufficient conditions on preference for the optimality of bonuses. We find that the optimal contract must include a bonus when agents suffer from loss aversion or exhibit sufficiently strong diminishing sensitivity. Moreover, we show that such a result holds when the reference point is either exogenous or deterministic. This paper provides a rationale for incentive schemes including bonuses grounded in preference. [ABSTRACT FROM AUTHOR]

Impaired decision‐making is often displayed by individuals suffering from gambling disorder (GD). Since there are a variety of different phenomena influencing decision‐making, we focused in this study on the effects of GD on neural and behavioural processes related to loss aversion and choice difficulty. Behavioural responses as well as brain images of 23 patients with GD and 20 controls were recorded while they completed a mixed gambles task, where they had to decide to either accept or reject gambles with different amounts of potential gain and loss. We found no behavioural loss aversion in either group and no group differences regarding loss and gain‐related choice behaviour, but there was a weaker relation between choice difficulty and decision time in patients with GD. Similarly, we observed no group differences in processing of losses or gains, but choice difficulty was weaker associated with brain activity in the right anterior insula and anterior cingulate cortex in patients with GD. Our results showed for the first time the effects of GD on neural processes related to choice difficulty. In addition, our findings on choice difficulty give new insights on the psychopathology of GD and on neural processes related to impaired decision‐making in GD. [ABSTRACT FROM AUTHOR]