A Conceptual Framework for Bounded Rationality in Bank Officers’ Credit Decision for SME Lending in Malaysia

Based on the Bounded Rational Theory, ideally, bank credit officers would be influenced by both rational (fundamental factors) and irrational (behavioural factors) in their credit assessment and decision making process. Emphasizing on the irrational decision making perspective, behavioural factors distort the credit decision making process in the banking industry. Despite such evidence, the psychology perspectives in bank lending practice has been given little attention in research and neglected in practice and policy perspectives. This conceptual research investigated the role of irrationality in bank lending decision making. The research design involved three stages. The research started with conceptualization of the bounded rational credit decision framework. This was designed based on review of three theories and related empirical evidence. In the second stage, constructs and their measurement items were sourced from prior work. Thereafter, a questionnaire was developed. In the third stage, the validity of the questionnaire was tested using expert validation, pre-test and pilot-test involving 30 credit officers working in business banking division of a Malaysian bank. Findings from the pilot study confirmed the validity of the questionnaire as an instrument that can be used for future empirical test. This bounded rational credit decision framework can guide further empirical analysis on the role of behavioural factors in lending decision making. The framework provides new insights that are valuable in enhancing the SMEs lending theory, practice, and policy. Keywords: behavioural finance, bounded rational theory, business banking, credit decision, small and medium-sized enterprises (SMEs)

Asymmetric Attention

We document that the expectations of households, firms, and professional forecasters in standard surveys simultaneously extrapolate from recent events and underreact to new information. Existing models of expectation formation, whether behavioral or rational, cannot account for these observations. We develop a rational theory of extrapolation based on limited attention, which is consistent with this evidence. In particular, we show that limited, asymmetric attention to procyclical variables can explain the coexistence of extrapolation and underreactions. We illustrate these mechanisms in a microfounded macroeconomic model, which generates expectations consistent with the survey data, and show that asymmetric attention increases business cycle fluctuations. (JEL C53, D83, D84, E23, E27, E32)

Parsing Model and a Rational Theory of Memory

This paper explores how the rational theory of memory summarized in Anderson (1991) can inform the computational psycholinguistic models of human parsing. It is shown that transition-based parsing is particularly suitable to be combined with Anderson's theory of memory systems. The combination of the rational theory of memory with the transition-based parsers results in a model of sentence processing that is data-driven and can be embedded in the cognitive architecture Adaptive Control of Thought-Rational (ACT-R). The predictions of the parser are tested against qualitative data (garden-path sentences) and a self-paced reading corpus (the Natural Stories corpus).

Transformasi televisi sebagai media belajar di tengah pandemi dalam kacamata rasional instrumental

During the Covid-19 pandemic, various areas of life experienced changes and adjustments, including in the field of education by conducting distance learning. As a form of adjustment for distance learning, the government and educators use television as a learning medium. The transformation of television as a learning medium is aimed at every level of education, one of which is at the high school level. This study aims to determine the form of television transformation in the perspective of the instrumental rational theory as well as the perspective of students on learning through television. This research was conducted using descriptive qualitative methods with data collection techniques through observation and interviews. The results obtained in the form of structured programs during learning through television as a form of instrumental rational action during distance learning as well as the perspective of students with this transformation. Pada masa pandemi Covid-19 berbagai bidang dalam kehidupan mengalami perubahan serta penyesuaian, termasuk pada bidang pendidikan dengan mengadakan pembelajaran jarak jauh. Sebagai bentuk penyesuaian pembelajaran jarak jauh tersebut pihak pemerintah serta pendidik memanfaatkan televisi sebagai media belajar. Transformasi televisi sebagai media belajar ini ditujukan pada setiap jenjang pendidikan, salah satunya pada jenjang sekolah menengah. Penelitian ini bertujuan untuk mengetahui bentuk transformasi televisi dalam perspektif teori rasional instrumental tersebut serta perspektif peserta didik akan kegiatan belajar memelalui televisi. Penelitian ini dilakukan dengan menggunakan metode kualitatif deskriptif dengan teknik pengumpulan data melalui observasi serta wawancara. Hasil yang diperoleh berupa adanya program terstruktur selama pembelajaran melalui televisi sebagai bentuk tindakan rasional instrumental selama pembelajaran jarak jauh serta perspektif peserta didik dengan adanya transformasi tersebut.

Podzielić się nowoczesnością. Reparacje 2.0?

This article embarks on a fresh and pragmatic look at German reparations for Poland. The analysis is based on a historical, neo-institutional and rational theory approach. It covers past and current experiences of the ‘reparations debate’. Then, in the context of Europeanisation processes and the Polish middle-income trap, the authors explain their original concept on how to identify areas of possible technological cooperation and provide recommendations. This strategic attempt to share modernity may enhance Polish economic development and enter the social and political debate as an effective means of Polish-German reconciliation.

A Rational Theory of the Rights of Children

Libertarianism has often found itself under attack from those with misplaced maternal instincts, who champion the state as the honorable protector of the vulnerable – and there is no one more in need of protection than a helpless infant. Consequently, much of the vitriol aimed at libertarianism and its laissez-faire attitude has included morbid references to child abuse and exploitation which would supposedly result from its implementation. It is therefore imperative that more work be done on the topic of children’s rights in order to reinforce the philosophical framework developed by Murray Rothbard [9] and expanded on by Walter Block and others [2], [3], [5], [6]. The purpose of this paper is to provide an independent rational foundation for the conclusions drawn by Block and co-authors [2], [5] and to expand on parts that are insufficient.

What are we curious about?

What are we curious about? Dubey and Griffiths propose a rational theory of curiosity that unifies previously contradictory novelty-based and complexity accounts. It also paves the way for future investigations, such as studying approximate models of curiosity as well as what causes abnormal levels of exploration.

Liquidity Sentiments

We develop a rational theory of liquidity sentiments in which the market outcome in any given period depends on agents’ expectations about market conditions in future periods. Our theory is based on the interaction between adverse selection and resale considerations giving rise to an intertemporal coordination problem that yields multiple self-fulfilling equilibria. We construct “sentiment” equilibria in which sunspots generate fluctuations in prices, volume, and welfare, all of which are positively correlated. The intertemporal nature of the coordination problem disciplines the set of possible sentiment dynamics. In particular, sentiments must be sufficiently persistent and transitions must be stochastic. We consider an extension with production in which asset quality is endogenously determined and provide conditions under which sentiments are a necessary feature of any equilibrium. A testable implication is that assets produced in good times are of lower average quality than those produced in bad times. (JEL D84, D82, E32, E44, G12)