Consumer Engagement through Conditional Promotions

This paper investigates consumers' response to conditional promotions (CP) offered in an offline retail store. Using qualitative research inquiry, we decipher the consumer decision-making process by finding the linkages between 'pre-cart' and the 'post-cart' add-on purchases. Thematic analysis of qualitative data (focus groups and personal interviews) resulted in four themes, i.e. 'Criticality of Product Utility,' 'Mode of Payments,' 'Loss Aversion by Consumers,' and 'Inability to Think Out-of-Box by the Consumers.' We add value to the existing marketing literature by finding the relationship between products purchased in 'pre-cart', i.e., without the knowledge of CP and 'post-cart', defined as add-on products added to the cart to avail the CP offer while purchasing in an offline retail store. Further, we find that consumers' willingness to avail CP varies with different relative distances from the target purchase cart value (high vs. low) and mode of payments (cash vs. digital). We discuss the theoretical and managerial implications of the research.

Loss Aversion in Companies Whose Location Is Affected by Fire

In Portugal, fires have originated a big debate not only because of the environmental damages they cause but also because of the material damages they provoke to families and companies. This way, it is important to understand how these events impact companies' cash holdings, not because of the direct damages caused by them, but because of managers' loss aversion. The empirical evidence, mainly documented by Dessaint and Matray and Kahneman and Tversky, were the main sources to this empirical study, where the authors have chosen to work with panel data analysis using a sample of 38,574 small and medium enterprises during the period from 2009 to 2015. About the obtained results, there is evidence that cash holdings increase when managers of a company located in a region close to a fire, but not directly damaged by it, perceive a salient event of a future fire. In other words, when they anticipate the occurrence of an identical event, cash holdings are increased to protect the company against it.

A new hybrid method for selecting the best project manager: TODIM-FSE and Behavioral TOPSIS

This work aims to present the application of Multi-Criteria Decision-Making methods to the process of recruiting candidates for the position of project manager, considering aspects of the decision maker's preferences in uncertain and risk scenarios. Applied, descriptive and experimental, made up of the combined employment TODIM-FSE methods for multi-criteria classification of available candidates, and the method Behavioral TOPSIS, to choose the ideal project manager. The hybrid application of the Multi-Criteria Decision-Making methods TODIM-FSE, method based on Prospect Theory, and Behavioral TOPSIS, which considers the concept of loss aversion of Economic Behavior, is essentially innovative. When using TODIM-FSE and Behavioral TOPSIS, it was verified the explicit incorporation of the risk profile of the decision maker - aggressive, neutral, or conservative - in the context of aversion or propensity to the risks associated with the management of a project. Through the personal recruiting process from a large Brazilian organization, the possibility of adopting the hybrid model resulting from the combination of the two methods in a real situation was validated. Such validation allowed us to conclude that the candidates' classifications and choices, previously normally accepted, were at odds with the profile and risk propensity of the decision makers.

An Experimental Economic Study of Loss Aversion in Stock Trading Decisions

The disposition effect is a form of behavioral bias that tends to result in investors holding on to their losing stocks for too long and selling winning stocks too soon. It can be explained by the behavioral economics theory of loss aversion. Even though many have studied this kind of behavioral bias in a variety of different countries, none of them have investigated the disposition effect in the case of Thailand. Therefore, the main objective of our study is to test the disposition effect among Thais by applying the experimental economic approaches of Weber & Camerer (1998) and Odean (1998) whilst also including the findings from questionnaires and interviews. We set up a simulation stock trading market to test the disposition effect of participants regardless of whether they had stock trading experienced or not. Subjects were required to trade among six stocks in 14 trading periods. We also added three more periods to test how different types of news impacted the subjects’ trading decisions. In addition, we analyzed socioeconomic factors that affect disposition effect behavior by using an econometric binary choice model. We found that this experiment can exhibit the disposition effect of subjects in terms of overall and individual measurement. In normal stock trading situations, we found that over 70% of subjects showed clear signs of the disposition effect, which seemed to decrease after they received fictional news.

A threat-centered theory of policy entrepreneurship

We know relatively little about the conditions that encourage people to jump into the political fray as policy entrepreneurs, advocates who devote substantial time, energy, and resources to campaigning for a policy goal. This paper aims to fill that gap by investigating the catalysts of policy entrepreneurship in municipalities across the State of New York, where between 2008 and 2012, hundreds of local jurisdictions passed measures opposing or supporting high-volume hydraulic fracturing (fracking). These local policy actions were often enthusiastically encouraged and, in some cases, vociferously opposed, by enterprising advocates. I propose a threat-centered theory of policy entrepreneurship, emphasizing the role of loss aversion in pushing actors toward advocacy. The empirical analysis shows that oppositional advocacy within a polity draws would-be policy entrepreneurs into battle.

Green Supply Chain Management with Nash Bargaining Loss-Averse Reference Dependence

This paper investigates a two-echelon green supply chain (GSC) with a single loss-averse manufacturer and a single loss-averse retailer. Since the Nash bargaining solution exactly characterizes endogenous power and the contribution of the GSC members, it is introduced as the loss-averse reference point for the GSC members. Based on this, a decision model of the two-echelon GSC with loss aversion is formulated. The optimal strategies of price and product green degree are derived in four scenarios: (a) the centralized decision scenario with rational GSC members, namely the CD scenario; (b) the decentralized decision scenario with rational GSC members, namely the DD scenario; (c) the decentralized decision scenario with the GSC members loss-averse, where the manufacturer’s share is below its own loss-averse reference point, namely the DD(∆m ≥ πm) scenario; (d) the decentralized decision scenario with the GSC members loss-averse, where the retailer’s share is below its own loss-averse reference point, namely the DD(∆r ≥ πr) scenario. Then, a comparative analysis of the optimal strategies and profits in these four scenarios is conducted, and the impacts of loss aversion and green efficiency coefficient of products (GECP) on the GSC are also performed. The results show that (i) GECP has a critical influence on the retail price and the wholesale price; (ii) the GSC with loss aversion provide green products with the lowest green degree; (iii) the retail price, the wholesale price and product green degree are decreasing monotonically with the loss aversion level of the GSC member without incurring loss; (iv) furthermore, the effect of the loss aversion level of the GSC member with incurring loss on the optimal strategies is related to GECP and the gap between the GSC members’ loss aversion levels.

Herding and loss aversion in stock markets: mediating role of fear of missing out (FOMO) in retail investors

PurposeThe study aims to understand the impact of loss aversion and herding on investment decision of retail investors. The study further evaluates the mediating role of fear of missing out (FOMO) in retail investors on these relationships.Design/methodology/approachThe study employed questionnaire survey to collect data from retail investors of Indian stock market. Total 323 data were collected. The collected data were examined using SmartPLS. Factor analysis and partial least square structural equation modeling were employed for fulfilling the objectives of the study.FindingsThe results of the study revealed that investment decisions of retail investors are significantly influenced by loss aversion, herd behavior as well as FOMO. Assessing the impact of herd behavior and loss aversion on investment decision in presence and absence of FOMO exposed that FOMO partially mediates these relations. The mediation was complementary in nature as the presence of FOMO increased the influence of loss aversion and herd behavior on retail investor's investment decisions.Practical implicationsBehavioral predispositions are accountable for numerous irregularities in stock markets. Thus, it is quite substantial to realize the stimulus of these partialities on investment decisions. The outcomes of this study would help financial planners and investors to keep in mind the different ways their decision outcomes could be biased and try to ignore them.Originality/valueThough there have been many studies conducted on behavioral biases and their impact on investment decisions, there are very few studies that have taken into account the FOMO factor in investment, in context of the behavioral biases. Theoretically, FOMO has been linked with herd behavior and greed of earning more, but there are very few empirical supports to this fact. Thus, this study is an attempt to fill this gap by examining the role of FOMO on investment decisions and the different biases associated with it.