The role of disappointment aversion and expectation proclivity in describing financial risk aversion among financial decision-makers

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
John E. Grable ◽  
Eun Jin Kwak
Keyword(s):  
Risk Aversion ◽  
Decision Maker ◽  
Financial Risk ◽  
Negative Relationship ◽  
Outcome Expectations ◽  
Decision Makers ◽  
Content Type ◽  
High Expectations ◽  
Disappointment Aversion ◽  
Financial Decision

PurposeUsing data obtained from 525 individuals who were surveyed during early spring 2020, this study addressed three aims: (1) to ascertain the degree to which disappointment aversion and expectation proclivity are related; (2) to identify who is most likely to exhibit patterns of disappointment aversion; and (3) to determine to what extent the combination of disappointment aversion and expectation proclivity is associated with financial risk aversion.Design/methodology/approachSeveral analytic methods were used in this study. Descriptive statistics were calculated for each of the measures examined in this study. Correlation, analysis of variance (ANOVA) and regression techniques were used to estimate associations between and among the variables of interest in this study.FindingsA negative relationship between disappointment aversion and expectation proclivity was noted, which is counter to conventional thinking. It is traditionally thought that those who establish high expectations will experience the greatest disappointment when choice outcomes fall below expectations. In this study, it was determined that when a financial decision-maker consistently establishes high outcome expectations and results fall below expectations, the financial decision-maker feels less disappointment. More precisely, those who consistently establish high expectations tend to be more disappointment tolerant than others.Research limitations/implicationsThis paper provides evidence that categories of disappointment aversion and expectation proclivity are associated with financial risk aversion and certain demographic characteristics.Practical implicationsThis paper adds support for assertions made in the International Journal of Bank Marketing (IJBM) that it is important for financial service professionals and bankers to manage customer expectations to reduce disappointment with products and services. This paper shows that combinations of disappointment aversion and expectation proclivity are related to the financial risk aversion of customers.Social implicationsFindings from this paper indicate that a commonly used heuristic that decision-makers should reduce expectations to avoid disappointment may not be accurate or particularly useful in the context of financial decision-making.Originality/valueFindings from this study add to the existing body of literature by showing that aversion to disappointment and the establishment of expectations, while distinct concepts, are interrelated.

Risk-taking and risk aversion in the period of before and after the 2008 crisis: evaluation with bibliometric analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Selim Aren ◽  
Hatice Nayman Hamamci
Keyword(s):  
Risk Aversion ◽  
Bibliometric Analysis ◽  
Risk Taking ◽  
Financial Risk ◽  
Investor Sentiment ◽  
The Other ◽  
Content Type ◽  
Risk Appetite ◽  
Java Program ◽  
Before And After

PurposeThis study aims to quantitatively classify the articles with risk-taking and risk aversion keywords and to investigate whether there is a similar emphasis in articles as parallel to the change in risk appetite in the market in the period before the crisis (bubble period) and after the crisis.Design/methodology/approachIn this study, a bibliometric analysis of the articles in which the keywords risk-taking and risk aversion are mentioned together with the word finance in the journals scanned in the Web of Science between 2004 and 2012 was performed. In this context, 936 articles were specified. Analyses were made using the CiteSpace Java program.FindingsThe three journals with the most articles with these characteristics are Journal of Banking and Finance, Journal of Financial Economics and Strategic Management Journal. Along with these two main keywords, the other two most used keywords were “model” and “performance”. In addition, the keywords “attitude”, “corporate governance”, “choice” and “determinant” were used more in the post-crisis period. On the other hand, concepts such as investor sentiment or emotions were not amongst the 10 most frequently used keywords during the nine years. This can be considered as an indicator that risk is being modelled, but emotions are relatively neglected. As a result, the findings of this study show that academic papers do not develop in connection with the mood and excitement in the market.Originality/valueThis study is one of the first studies to examine the reflection of risk appetite in the market on academic papers on financial risk-taking and aversion and to investigate whether the situation in the market and the development in publications are related.

Hotel and IT decision-maker characteristics and information technology adoption relationship in the hotel industry

2014 ◽  
Vol 5 (2) ◽  
pp. 194-206 ◽  
Author(s):  
Ahmet Bulent Ozturk ◽  
Murat Hancer
Keyword(s):  
Information Technology ◽  
Technology Adoption ◽  
Decision Maker ◽  
Hotel Industry ◽  
Education Level ◽  
Decision Makers ◽  
Rfid Technology ◽  
Job Tenure ◽  
Content Type ◽  
Intention To Adopt

Purpose – The purpose of this paper is to investigate the impact of hotel property characteristics and information technology (IT) decision-maker characteristics on radio frequency identification (RFID) technology adoption in the hotel industry. Design/methodology/approach – The data of the study were collected using the subscription list of Hospitality Financial and Technology Professionals (HFTP). A Web survey was used to collect the data of the study. An email invitation was sent out to invite the entire list of HFTP subscribers (3,080) to participate in the survey. Approximately 3,000 emails were delivered and 154 questionnaires were returned. Of 154 questionnaires, 125 were used in the study for further analyses. Analysis of variance (ANOVA) was used to determine whether hotel property characteristics (property size and chain affiliation) and IT decision-maker characteristics (age, education level and job tenure) differed on intention to adopt RFID technology. Findings – ANOVA results indicated that there were significant differences on intention to adopt RFID technology by property size and chain affiliation, IT decision-makers’ age, education level and job tenure. The results indicated that larger hotels and hotels that are part of a franchise are more likely to adopt RFID technology. In addition, IT decision-makers who are young, with high level of education and with shorter job tenure are more likely to adopt RFID technology. Originality/value – RFID technology is one of the recent technologies that gained great attention from the hotel operators in recent years. This study is one of the first studies in the hotel industry that provides valuable information to technology vendors for identifying potential RFID technology adopters in the hotel industry.

Altruism as a pathway to unethical action

2020 ◽  
Vol 36 (2) ◽  
pp. 235-247
Author(s):  
Michael Babula ◽  
Max Tookey ◽  
Glenn Muschert ◽  
Mark Neal
Keyword(s):  
Decision Making ◽  
Decision Maker ◽  
Unethical Behavior ◽  
Design Methodology ◽  
Ethical Decision ◽  
Ethical Decision Making ◽  
Self Esteem ◽  
Decision Makers ◽  
Content Type ◽  
The Poor

Purpose The purpose of this paper is to answer the question, “Can particular types of altruism influence people to make unethical decisions?” The purpose of seeking to answer this question is to better understand those cases in personal, public and commercial life whereby a decision-maker is influenced by what is widely perceived to be a positive thing – altruism – to make unethical choices. Design/methodology/approach An experiment was designed to test the influence of different categories of altruism on decision-making about whether to find another guilty for a regulatory transgression. This involved the establishment and running of a student panel at a UK university, which was given the task of determining the guilt or otherwise of two students accused of plagiarism – one from a poor background; one from a rich background. Through a survey of both the decision-makers and their judgments, and by analyzing the data using t-tests and Mann–Whitney tests, the associations between different categories of altruism and the decisions made could be ascertained. Findings A total of 70.7% of the participants voted “not-guilty” for the poor student, whereas 68.3% voted “guilty” for the wealthy student. This indicated that self-interested, namely, egoistic altruism complemented by social and self-esteem needs gratification was significantly associated with violating foundational ethical principles. Originality/value This is the first study to be done that attempts to evaluate the relationships between different categories of altruism and ethical decision-making. The findings here challenge aggregating all forms of empathy together when exploring the antecedents of unethical behavior.

Conflicts and creative idea endorsement

2019 ◽  
Vol 30 (5) ◽  
pp. 637-656
Author(s):  
Ahmad Adeel ◽  
Zhang Pengcheng ◽  
Farida Saleem ◽  
Rizwan Ali ◽  
Samreen Batool
Keyword(s):  
Negative Relationship ◽  
Idea Generation ◽  
Decision Makers ◽  
Relationship Conflict ◽  
Negative Effects ◽  
Exchange Relationships ◽  
Content Type ◽  
Political Skills ◽  
Creative Idea ◽  
Relationship Conflicts

Purpose This paper aims to investigate relationship conflicts and creative idea endorsement to develop the understanding of managerial reactions towards ideas of those who develop relationship conflicts with managers/supervisors at work. Taking a contingency perspective, the authors also investigated role subordinates’ political skills and implementation instrumentality play in determining supervisors’ endorsement of subordinates’ creative ideas. Design/methodology/approach The authors used two sources of data collected from 243 subordinates and their respective 41 supervisors of a multinational software company operating in an emerging economy (Pakistan) and analyzed the hypothesized model with Mplus using random coefficient modeling. Findings With this research, the authors contributed to management literature by investigating how the effects of relationship conflicts on creative idea endorsement depend on subordinates’ political skills and implementation instrumentality. They postulate a negative relationship between relationship conflict and creative ideas endorsement and predict that this negative relationship is augmented by subordinates’ implementation instrumentality but attenuated by subordinates’ political skills. They also give directions to decision makers in organizations that they must inform the managers/supervisors about negative effects of their relationship conflict with their subordinates and train supervisors and subordinates about reducing their relationship conflicts with each other for mutual benefits. Originality/value Organizations should take a relationship perspective when creating an environment for creativity: an environment based on mutual trust and respect so that exchange relationships can foster. With this research, the authors extended the list of potential detriment associated with relationship conflicts, that is the endorsement of creative ideas by supervisors. The authors also extended creativity literature by investigating social relationships for selection-focused creativity (idea endorsement) instead of variance-focused creativity (idea generation).

scholarly journals Information for decision-making in in-house and outsourced real estate management organisations

Facilities ◽  
2016 ◽  
Vol 34 (13/14) ◽  
pp. 891-905 ◽  
Author(s):  
Peter Palm
Keyword(s):  
Real Estate ◽  
Decision Maker ◽  
Commercial Real Estate ◽  
Decision Makers ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Real Estate Sector ◽  
Estate Management ◽  
Real Estate Management

Purpose The purpose of this paper is to examine how the real estate owner (decision maker) insures being able to make informed decisions and how they differ according to organisational form. Design/methodology/approach This research is based on an interview study of nineteen firm representatives, six decision makers and thirteen management representatives, all from Swedish commercial real estate sector. Findings The study concludes that, regardless of organisational setting, the industry has a plan regarding handling information. The decision makers have all secured themselves access to the required/desired information. How this is done and what kind of information it is however differ, if the real estate management is in-house or outsourced. Furthermore, a clear focus on financial and contractual information is evident in both organisational settings. Research limitations/implications The research in this paper is limited to Swedish commercial real estate sector. Practical implications The insight the paper provides regarding required information can shed light on how information systems are built and how to improve your information sharing. Originality/value It provides an insight regarding how the industry, depending on organisation setting, prioritises different information and how the decision maker secures access to it.

scholarly journals Modeling of Risk Aversion Linked to Renewable Energy Policy and Decision-Maker Behavior

2022 ◽  
Author(s):  
Dieudonné Dieudo Ecike Ewanga
Keyword(s):  
Risk Aversion ◽  
Decision Maker ◽  
Decision Support Tool ◽  
Renewable Energies ◽  
Decision Makers ◽  
Risk Averse ◽  
Renewable Energy Policy ◽  
Support Tool ◽  
Electricity Grid ◽  
Concave Utility Function

This paper presents the behavior of decision makers, the possible choices and the strategies 1 resulting from the uncertainties related to the integration of renewable energies. Its uncertainties 2 are the risks associated with the volatility of renewable sources, the dynamics of energy production 3 as well as the planning and operation of the electricity grid. The goal is to model the risk-averse 4 decision-maker’s behavior and the choice of integrating renewable energies into the electrical system. 5 Following a bibliographic approach, we expose a methodology to model the decision-maker’s 6 behavior(risk aversion and predilection for risk) to risk taking. The risk-averse decision maker may 7 adopt nonlinear utility functions. Risk aversion is a behavior that reflects the desire to avoid risk 8 decisions and thus reduces the risk of adverse consequences. A decision support tool is provided to 9 the decision-maker to choose a best-fit strategy based on his preferences. The rational and risk-averse 10 decision-maker would seek to maximize a concave utility function instead of seeking to minimize its 11 cost. Taste or aversion to risk can be modeled by a thematic function of utility.

Decision-maker characteristics and international decisions for SMEs

2015 ◽  
Vol 53 (10) ◽  
pp. 2226-2249 ◽  
Author(s):  
Barbara Francioni ◽  
Fabio Musso ◽  
Marco Cioppi
Keyword(s):  
Decision Maker ◽  
Design Methodology ◽  
Risk Attitude ◽  
Decision Makers ◽  
Strategic Decision ◽  
International Strategy ◽  
Content Type ◽  
Political Behaviour ◽  
Internationalization Strategies ◽  
The Relationship

Purpose – The purpose of this paper is to explore how characteristics of decision-makers influence internationalization strategies within small and medium-sized enterprises (SMEs), with a particular focus on the strategic decision-making process (SDMP). Design/methodology/approach – This work is based on a sample of 165 decision-makers of SMEs, using hierarchical multiple regression to examine the relationship between the dimensions studied. Findings – The results of a regression analysis suggest that decision-makers tend to follow a more rational SDMP depending on their education level and risk attitude, and the firm’s past international performance. At the same time, the political behaviour of the decision-maker emerges as a character associated with their risk attitude and need for achievement, and it is negatively influenced by age. Originality/value – This research contributes to the growing literature on SMEs, combining the field of analysis of SDMP with that of international strategy. Moreover, unlike previous studies, which have focused on the top management team, managers, CEOs, or entrepreneurs, this study analyses the characteristics and behaviour of decision-makers.

Financial Risk Tolerance Before and After a Stock Market Shock: Testing the Recency Bias Hypothesis

2020 ◽  
pp. JFCP-19-00025
Author(s):  
Abed G. Rabbani ◽  
John E. Grable ◽  
Barbara O'Neill ◽  
Frances Lawrence ◽  
Zheying Yao
Keyword(s):  
Stock Market ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Decision Makers ◽  
Multivariate Tests ◽  
Major Market ◽  
Stock Market Performance ◽  
Before And After ◽  
Financial Decision ◽  
Financial Risk Tolerance

Is there an association between a household financial decision maker’s risk tolerance and the performance of the stock market? Some researchers argue that financial market events have little association with the financial risk tolerance (FRT) of household financial decision makers, while others argue that FRT among individuals can vary in relation to significant market fluctuations. The applicability of either argument may depend on the length of the period before and after a major market event. The purpose of this study was to evaluate aggregate changes in FRT around a major stock market event for different anchor time periods and to test the recency bias hypothesis. The analyses were designed to explore the FRT of Americans during a volatile multimonth period of stock market performance in 2018–2019. Several univariate, bivariate, and multivariate tests were used to compare FRT assessment scores pre- and post-October 3rd, 2018 (i.e., the market high in 2018). A decrease in FRT from the market high was noted across the sample; however, the decrease was exhibited most acutely by younger, nonmarried respondents with few investable assets. A noteworthy finding from this study is that financial counselors and financial planners likely serve a “buffering” role when household financial decision makers experience stock market shocks.

scholarly journals Intergenerational contact and hiring decisions about older workers

2017 ◽  
Vol 32 (3) ◽  
pp. 210-224 ◽  
Author(s):  
Ulrike Fasbender ◽  
Mo Wang
Keyword(s):  
Older People ◽  
Older Workers ◽  
Negative Relationship ◽  
Decision Makers ◽  
Hiring Decisions ◽  
Intergroup Contact Theory ◽  
Content Type ◽  
Intergroup Anxiety ◽  
Age Related ◽  
Contact Frequency

Purpose Although many older workers wish to work longer, they may not be hired due to negative attitudes against them. The purpose of this paper is to investigate the role of intergenerational contact in shaping hiring decisions. Drawing from the intergroup contact theory, the authors investigated affective and cognitive categorization reactions as predictors of decision-makers’ willingness to hire older people and whether these relationships are moderated by intergenerational contact frequency and quality. Design/methodology/approach The authors tested the hypotheses using data from 232 employees with hiring power. Findings Results indicate that intergroup anxiety was negatively related to decision-makers’ willingness to hire older people. Further, intergenerational contact frequency exacerbated the relationship between intergroup anxiety and willingness to hire older people; whereas intergenerational contact quality buffered the negative relationship. In addition, the authors found that intergenerational contact quality facilitated the positive relationship between perceived outgroup competence and willingness to hire older people. Originality/value These findings extend previous research on older worker employment. In particular, they demonstrate how intergenerational contact frequency and quality can be powerful means that influence age-related hiring decisions.

Agreement options for negotiation on material location decision of housing development

2020 ◽  
Vol 20 (2) ◽  
pp. 209-222 ◽  
Author(s):  
Christiono Utomo ◽  
Yani Rahmawati
Keyword(s):  
Game Theory ◽  
Decision Maker ◽  
Coalition Formation ◽  
Group Decision ◽  
Negotiation Process ◽  
Housing Development ◽  
Decision Makers ◽  
Strategic Decision ◽  
Content Type ◽  
Best Fit

Purpose Different housing development stakeholders need to cooperate and collaborate to perform various project activities. Housing development requires infrastructure development, which includes preparation of sand material embankment as much as ± 200,000 m3. The objectives are to find a model for agreement options and coalition, to validate the algorithms of the best fit for material locations and to determine how much the proposed agreement option was achieved. This study provides a structured methodology that can lead to systematic support system and automated negotiation for decision-making on housing development process. Design/methodology/approach Agreement option on group decision techniques was applied to determine the relative value of the alternative solutions for performing the function of project solutions. Analytical hierarchy process based on satisficing option was applied for decision process and game theory-based agent system for coalition formation. It is conducted in two stages that determine the decision preference and decision process consisting of four steps. The steps are constructing decision hierarchy, making judgment and synthesis, determining payoff optimum and analyzing the best fit option for all decision-makers. Findings The proposed model enables each decision-maker to select individually its coalition. It will improve the value of strategic decision. All solutions are chosen by more than one decision-maker and coalitions, where all decision-makers agree with the result. It becomes possible location for the material of a housing development. A support model enables negotiation process in group decision. Decision algorithms are based on the cooperative game theory to develop the agreement options and coalition formation. Similar research studies were carried out in this area, but this research is – to the knowledge of the authors – the first to apply the satisficing of value-based on desirable and considerable. Research limitations/implications The result is limited to the first-round negotiation of collaborative decision. A trade-off algorithm among decision-maker preference is needed for negotiation process. Future research is to continue working on multi-attribute decision-making, specifically on the process of eliciting user preference models such as neural network application and value function, and on establishing expert quantitative data from qualitative description of the feature of the alternative solution. It will need the development of trade-off algorithms to analyze value of technical solution in real time. Practical implications The support model can be extended to an automated negotiation and in different strategic decision on all stages of housing development. Social implications The satisficing algorithm of the coalition will satisfy all stakeholders. This will reduce any potential conflict. Originality/value Combination of value-based decision, group decision and collaborative support. Application of coalition formation for agreement options is used to select the best fit material location. It is based on satisficing game theory rather than optimization.

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