Risk propensity theory, measurement and application in finance decision making

2000 ◽  
Author(s):  
Nigel Nicholson ◽  
Mark Fenton-O'Creevy ◽  
Emma Soane ◽  
Paul Willman
Keyword(s):  
Decision Making ◽  
Risk Propensity ◽  
Propensity Theory

Evaluating Risk-Propensity Assessment Methods: Patterns in Repeated Exposure to Emotional Stimuli

2020 ◽  
Vol 64 (1) ◽  
pp. 283-287
Author(s):  
Sahinya Susindar ◽  
Harrison Wissel-Littmann ◽  
Terry Ho ◽  
Thomas K. Ferris
Keyword(s):  
Decision Making ◽  
Emotion Regulation ◽  
Assessment Method ◽  
Decision Makers ◽  
Decision Task ◽  
Emotional States ◽  
Affective States ◽  
Risk Propensity ◽  
Emotional Stimuli ◽  
Comparison Results

In studying naturalistic human decision-making, it is important to understand how emotional states shape decision-making processes and outcomes. Emotion regulation techniques can improve the quality of decisions, but there are several challenges to evaluating these techniques in a controlled research context. Determining the effectiveness of emotion regulation techniques requires methodology that can: 1) reliably elicit desired emotions in decision-makers; 2) include decision tasks with response measures that are sensitive to emotional loading; and 3) support repeated exposures/trials with relatively-consistent emotional loading and response sensitivity. The current study investigates one common method, the Balloon Analog Risk Task (BART), for its consistency and reliability in measuring the risk-propensity of decision-makers, and specifically how the method’s effectiveness might change over the course of repeated exposures. With the PANASX subjective assessment serving for comparison, results suggest the BART assessment method, when applied over repeated exposures, is reduced in its sensitivity to emotional stimuli and exhibits decision task-related learning effects which influence the observed trends in response data in complex ways. This work is valuable for researchers in decision-making and to guide design for humans with consideration for their affective states.

scholarly journals POWER, THE RISK PROPENSITY, INNOVATION SYSTEMS TO THE DECISION MAKING OF THE PRINCIPALS SENIOR HIGH SCHOOL ACCREDITED "A" DKI JAKARTA 2017

2017 ◽  
Vol 1 (1) ◽  
pp. 11
Author(s):  
Raden Heni Muljani
Keyword(s):  
High School ◽  
Decision Making ◽  
Direct Effect ◽  
Research Result ◽  
Simple Random Sampling ◽  
Innovation Systems ◽  
Senior High School ◽  
Survey Method ◽  
Risk Propensity ◽  
Positive Direct

The research objectives was to study the effect of power, the propensity for risk, and innovation systems to the decision making of the principals of senior high school accredited “A” DKI Jakarta. The research method used quantitative approach with survey method. The samples research were 148 principals of senior high school as respondents who were selected through simple random sampling. Process for the research result has been used path analysis. The result of the research can be concluded (1) there was a positive direct effect of power to decision making, (2) there was a positive direct effect of propensity for risk to decision making, (3) there was a positive direct effect of the innovation systems to decision making, (4) there was a positive direct effect of the power to the innovation systems and (5) there was a positive direct effect of risk propensity to innovation systems. Therefore, variations in the principal's decision making is influenced by variations of power, the propensity for risk, and innovation systems.

scholarly journals Eating to dare - Nutrition impacts human risky decision and related brain function

2020 ◽  
Author(s):  
Lu Liu ◽  
Sergio Oroz Artigas ◽  
Anja Ulrich ◽  
Jeremy Tardu ◽  
Peter N. C. Mohr ◽  
...  
Keyword(s):  
Decision Making ◽  
Body Fat ◽  
Fat Mass ◽  
Brain Function ◽  
Body Fat Mass ◽  
Risk Propensity ◽  
Risky Decision ◽  
Plasma Tryptophan ◽  
Parietal Lobule ◽  
Risky Decisions

AbstractMacronutrient composition modulates plasma amino acids that are precursors of neurotransmitters and can impact brain function and decisions. Neurotransmitter serotonin has been shown to regulate not only food intake, but also economic decisions. We investigated whether an acute nutrition-manipulation inducing plasma tryptophan fluctuation affects brain function, thereby affecting risky decisions. Breakfasts differing in carbohydrate/protein ratios were offered to test changes in risky decision making while metabolic and neural dynamics were tracked. We identified that a high-carbohydrate/protein meal increased plasma tryptophan which mapped to individual risk propensity changes. Moreover, the meal-driven fluctuation in tryptophan and risk propensity changes were modulated by individual difference in body fat mass. Using fMRI, we further identified activation in the parietal lobule during risk-processing, of which activities 1) were correlated with the risk propensity changes in decision making, 2) were sensitive to the tryptophan fluctuation, and 3) were modulated by individual’s body fat mass. Furthermore, the activity in the parietal lobule positively mediated the tryptophan-fluctuation to risk-propensity-changes relationship. Our results provide evidence for a personalized nutrition-driven modulation on human risky decisions and its metabolic and neural mechanisms.

How to Measure Propensity to Take Risks in the Italian Context: The Italian Validation of the Risk Propensity Scale

2021 ◽  
pp. 003329412110547
Author(s):  
Giulia Marton ◽  
Dario Monzani ◽  
Laura Vergani ◽  
Silvia Francesca Maria Pizzoli ◽  
Gabriella Pravettoni
Keyword(s):  
Decision Making ◽  
Factor Structure ◽  
Discriminant Validity ◽  
Self Report ◽  
Implicit Measure ◽  
Risk Propensity ◽  
Italian Version ◽  
Italian Context ◽  
Almost All ◽  
Propensity Scale

Risk propensity is a multifaced construct that influences many aspects of life, such as decision making. In the present study, the psychometric characteristics of the Risk Propensity Scale (RPS) have been explored for the first time in an Italian sample. The RPS is a 7 item self-report questionnaire measuring people’s tendency to take risks. The English RPS has been translated following the forward–backwards translation method, and it was filled out by 199 participants. Since its dimensionality has never been explored before, its factor structure has been analysed with exploratory factor analysis that confirmed the one-factor structure of the questionnaire and the retention of all the items. The Italian version of the RPS has high internal consistency (Cronbach alphas .78), and almost all the items were positively and significantly correlated. The convergent and discriminant validity, analysed by considering the associations with decision-making styles and an implicit measure of risk propensity, were satisfactory. Overall, the Italian version of the RPS is a valid and quick questionnaire useful to measure propensity to take risks in the Italian context.

Risk Decision-Making System in Manufacture Enterprise Management

2013 ◽  
Vol 694-697 ◽  
pp. 3592-3595
Author(s):  
Yi Lin Chen
Keyword(s):  
Decision Making ◽  
Risk Perception ◽  
Enterprise Management ◽  
Individual Risk ◽  
Risk Propensity ◽  
Decision Making System ◽  
The Difference ◽  
The Impact ◽  
Level Of Risk ◽  
Risk Decision

Risk has always been at the core of entrepreneurs daily decision-making, but factors will influence individuals decision-making. In this study, we investigated risk decision-making and cognition process of venture experts and novices under a given venture contexts. The purpose of the experiment is to investigate the difference of risk perception, risk propensity among venture experts, novice and college students, and to investigate the impact of these factors to individual risk decision-making. The result shows that, for the level of risk perception, there are prominent differences in experts and novices, but for the level of risk propensity, there is no prominent difference in experts and novices. It could be concluded that it is the risk perception influence individual risk decision-making but not the risk propensity.

Impact of Equity Investment Intention Towards Behaviour: An Empirical Analysis

2021 ◽  
pp. 097226292110043
Author(s):  
Shelly Srivastava ◽  
Supriyo Roy
Keyword(s):  
Decision Making ◽  
Structural Equation ◽  
Investment Decision ◽  
Primary Data ◽  
Risk Propensity ◽  
Equity Investment ◽  
Investment Decision Making ◽  
Retail Investors ◽  
The Impact ◽  
Investment Behaviour

Investments made by investors contribute to both inflow and outflow of funds in the capital market. Investment decision making is complex due to its uncertain behaviour. In literature, there is evidence of a gap between intention and behaviour among other aspects of human behaviour like consumer buying behaviour. Therefore, this study explores the intention–behaviour gap in investment behaviour of retail investors by examining the effect of two moderators, namely risk propensity (RP) and opinion of stakeholders (OPI). The present study also focuses on identifying financial and non-financial factors influencing equity investment intention (EII) and measures its impact on equity investment behaviour (EIB). A model is, thus, conceptualized and hypotheses have been developed accordingly. For validation of the model, a set of primary data of retail investors is collected (through questionnaire framing) and the hypotheses are tested by using advanced statistical techniques, namely structural equation modelling. The outcomes of this study signify the impact of EII that catapults behavioural approach in investment decision making for any potential investor in the near future.

scholarly journals The Effect of Subjective Loss in Financial Risk Taking and Negative Emotion

2021 ◽  
Vol 12 ◽  
Author(s):  
Dongmei Mei ◽  
Shasha He ◽  
Liman Man Wai Li ◽  
Yiyi Zhu
Keyword(s):  
Decision Making ◽  
Risk Taking ◽  
Financial Risk ◽  
Negative Emotion ◽  
Emotional Experience ◽  
Psychological Processes ◽  
Risk Propensity ◽  
Loss Experience ◽  
Actual Loss ◽  
Subsequent Risk

The current research examined the influence of subjective loss on financial risk-taking tendency and negative emotional experience through inducing the experience of subjective loss in auction scenarios. In Study 1, we found that the subjective loss experience (compared to no-loss experience) in an auction scenario induced greater financial risk propensity, especially in gambling, greater negative emotion, and greater decision regret. In addition, we found that the subjective loss experience induced stronger negative emotion but less risk propensity in investment than the actual loss experience did, but these two types of loss did not yield a difference in risk propensity in gambling in Study 2. These results implicate that subjective loss is a distinct experience from no-loss and actual loss experiences, which is reflected by the degree of associated emotional experience and subsequent risk-taking propensity. The current research highlights the complex psychological processes of the experience of loss in decision-making contexts.

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