scholarly journals Quantifying the Cost of Decision Fatigue: Supoptimal Risk Decisions in Finance

2020 ◽  
Author(s):  
Tobias Baer ◽  
Simone Schnall
Keyword(s):  
Risk Taking ◽  
Financial Risk ◽  
Negative Impact ◽  
Real Life ◽  
Early Morning ◽  
Cognitive Effort ◽  
Default Option ◽  
Decision Outcomes ◽  
The Cost ◽  
Open Question

Making decisions over extended periods of time is cognitively taxing and can lead to decision fatigue, which is linked to a preference for the ‘default’ option, namely whatever decision involves the least cognitive effort. Such effects have been demonstrated across a number of applied settings, including forensic and clinical contexts. An open question, however, is whether this necessarily leads to worse decision outcomes. Using 26,501 credit restructuring applications evaluated by credit officers of a major bank, here we show that in this real-life financial risk taking context credit loan approvals across the course of a day decreased during midday compared to early or later in the workday, reflecting a preference for the default option. We then modeled the bank’s additional credit collection if all decisions had been made during early morning levels of approval. This would have resulted in $509,023 extra revenue for the bank, for one month. Thus, we provide further evidence for decision-fatigue, and that it can have a substantial negative impact in the finance sector that warrants considerations to counteract it.

scholarly journals Covid-19 in mind: how job loss and health threatening events modulate risk-taking behaviours in real-life contexts

2020 ◽  
Author(s):  
Caterina Galandra ◽  
Chiara Cerami ◽  
Gaia Santi ◽  
Alessandra Dodich ◽  
Stefano Cappa ◽  
...  
Keyword(s):  
Risk Taking ◽  
Healthcare Workers ◽  
Ad Hoc ◽  
Negative Impact ◽  
Real Life ◽  
Stressful Events ◽  
Risk Averse ◽  
Related Risk ◽  
Life Threatening ◽  
Person Experience

Covid-19 pandemic is exerting a tragic impact all around the world. First-person experience of life-threatening and stressful events can modify individuals’ risk perception, and, consequently, risk-taking behaviours. Here we investigated risk-taking profiles in 130 Italian residents, and compared healthcare to non-healthcare workers, during the lockdown phase. We ad hoc developed the “Covid-19 Risk Task”, including the classic monetary Holt-Laury Paired Lottery Task (Monetary Condition, MC) and two new ecological conditions exploring Covid-19 related risk-taking aptitudes in relation to different health (Health Status Condition, HsC) and employment (Employment Status Condition, EsC) outcomes. Results showed that, in the whole sample, individuals were more risk-averse in MC than in HsC and EsC. Moreover, a payoff increase produced a shift toward more risk-averse behaviours in MC, but not in HsC and EsC, where we found an opposite trend suggesting a more risk-loving behaviour. Finally, we found that healthcare workers were significantly less risk-averse compared to non-healthcare workers in EsC, but not in MC and HsC.These findings provided evidence of the possible effects of Covid-19 outbreak on risk-taking aptitudes. The negative impact on human choices and, consequently, on the whole world economy of this catastrophic life event must not be underestimated.

Improvement of public distribution system efficiency applying blockchain technology during pandemic outbreak (COVID-19)

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anup Kumar
Keyword(s):  
Supply Chain ◽  
Distribution System ◽  
Negative Impact ◽  
Real Life ◽  
Cost Benefit ◽  
Content Type ◽  
Public Distribution System ◽  
Blockchain Technology ◽  
Supply Chain Efficiency ◽  
The Cost

PurposeThe purpose of this paper is to analytically examine the viability of using blockchain technology (BT) in a public distribution system (PDS) supply chain to overcome issues of shrinkage, misplacement and ghost demand.Design/methodology/approachThe authors use a standard news vendor model with two objectives, the first of which includes a reduction of the total cost of stock, while the second includes minimization of the negative impact of human suffering due to the nonavailability of subsidized food supplies to the needy people.FindingsThe authors applied the model to a real-life case to draw meaningful insights. The authors also analyzed the cost/benefit tradeoff of adopting BT in a PDS supply chain. The results show that the adoption of BT in a charitable supply chain can reduce pilferage and ghost demand significantly.Originality/valueThe paper is positioned for utilizing inventory visibility via consistent and tamper-resistant data stream flow capability of BT to enhance the overall efficiency of PDS. Notably, Indian PDS faces three major challenges in terms of its supply chain efficiency.

scholarly journals Financial Risk Identification- A Taxonomy based Study

2018 ◽  
Vol 5 (01) ◽  
Author(s):  
Sangeeta Shankar ◽  
K. Ramulu ◽  
Shankar S
Keyword(s):  
Risk Taking ◽  
Financial Risk ◽  
Balance Sheet ◽  
Risk Identification ◽  
Time Effect ◽  
Business Activity ◽  
Doing Business ◽  
The Cost

Risk taking is the foundation of business activity. Quantifying it in an accurate manner such that the magnitude, impact, and point in time effect is recognized financially is critical for efficiency in business. Both unhedged and mispriced risk, while opposites in terms of the cost of doing business, have similar effects of loss of capital for the entire community an entity operates with. In this paper, we examine the list of known risks which need to firewalled against for a business to survive as well as thrive. Costing risks and derivatives in a similar manner allows for representing the health of a business in relation to its impact in the reassuringly standardized form of a balance sheet.

scholarly journals Does Testosterone Administration Increase Competitiveness, Confidence and Financial Risk-taking in Men?

2021 ◽  
Author(s):  
Amos Nadler ◽  
Matthias Wibral ◽  
Thomas Dohmen ◽  
Armin Falk ◽  
Alessandro Previtero ◽  
...  
Keyword(s):  
Risk Taking ◽  
Financial Risk ◽  
Statistical Power ◽  
Real Life ◽  
Economic Behavior ◽  
Challenge Hypothesis ◽  
Double Blind ◽  
Sex Steroid Hormone ◽  
Testosterone Administration ◽  
Willingness To Compete

The sex steroid hormone testosterone regulates male-typical behaviors such as aggression and displays of dominance in non-human animals. According to the Challenge Hypothesis, these effects arise from context-sensitive testosterone increases that facilitate inter-male competitions over resources, status, and mates. A growing literature documents similar effects of testosterone on economic behaviors related to competition and risk-taking in humans, though findings to date have been mixed. Here, we report two randomized double-blind placebo-controlled testosterone administration experiments, whose combined sample (N = 334) is substantially larger than any previous investigation of the topic (N1 = 91, N2 = 243). The studies were designed independently by research groups in Europe and the US, and both investigated testosterone’s effects on men’s willingness to compete, confidence, and risk-taking—dimensions of economic behavior that are theoretically linked to the Challenge Hypothesis, show robust sex differences, and predict important real-life outcomes such as career choice. We find no evidence for effects of testosterone on any of the behavioral tasks studied across the two experiments, with effect point estimates that are small and inconsistent. The studies had 90% statistical power to detect effects that are larger than d = 0.68 and d = 0.42 respectively, and equivalence tests confidently reject effects that are greater than these magnitudes. Our findings cast doubt on the proposition that testosterone is a meaningful causal driver of the stereotypically “masculine” dimensions of economic behavior studied, and suggest that even if true effects existed, detecting them experimentally would be challenging.

Exploring Different Types of Superstitious Beliefs in Risk-Taking Behaviors

2016 ◽  
Vol 23 (1) ◽  
pp. 47-63 ◽  
Author(s):  
Sydney Chinchanachokchai ◽  
Theeranuch Pusaksrikit ◽  
Siwarit Pongsakornrungsilp
Keyword(s):  
Risk Taking ◽  
Financial Risk ◽  
Negative Impact ◽  
Well Being ◽  
Risky Behaviors ◽  
Policy Implications ◽  
Human Society ◽  
Different Types ◽  
Risk Taking Behaviors ◽  
Superstitious Beliefs

Superstitions are common phenomena in human society, especially in Asian cultures. Superstitious beliefs can have a negative impact on the social well-being of people in society because they are highly associated with financial risk-taking and gambling behaviors. This study looks at the effects of different types of superstitious belief (proactive vs. passive) on consumers’ risk-taking behaviors. Categorized based on the characteristics associated with an illusion of control in a situation, proactive and passive superstitious beliefs were found to show differences in risk-taking behaviors. The results demonstrate that passive superstitious beliefs increase the likelihood of engaging in risky behaviors when a superstitious object is introduced. The research suggests social marketing and public policy implications.

Effects of Social Exclusion on Financial Risk Taking

2013 ◽  
Author(s):  
Rod Duclos ◽  
Echo Wen Wan ◽  
Yuwei Jiang
Keyword(s):  
Social Exclusion ◽  
Risk Taking ◽  
Financial Risk
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