Procurement Contract Design in Global Infrastructure Projects: The Impact of Loss Aversion

2019 ◽  
Author(s):  
Zhuo Feng ◽  
Qiao-Chu He ◽  
Yiwen Zhang
Keyword(s):  
Loss Aversion ◽  
Contract Design ◽  
Infrastructure Projects ◽  
Procurement Contract ◽  
The Impact

Market Reactions to a High-Quality Auditor and Managerial Preference for Audit Quality

2019 ◽  
Vol 38 (4) ◽  
pp. 131-149 ◽  
Author(s):  
Patrick J. Hurley ◽  
Brian W. Mayhew
Keyword(s):  
Loss Aversion ◽  
Audit Quality ◽  
Data Availability ◽  
Quality Competition ◽  
High Quality ◽  
Market Reactions ◽  
Comprehensive Theory ◽  
Audit Reports ◽  
The Impact ◽  
Quality Theory

SUMMARY We insert an automated high-quality (HQ) auditor into established experimental audit markets to test the impact of high-quality competition on other auditors' supply of and managers' demand for audit quality. Theory predicts that managers will demand high levels of audit quality to avoid investors' price-protecting behavior. This demand should result in the HQ auditor dominating the market and increase other auditors' audit quality provision to compete with the HQ auditor. However, we find that the HQ auditor does not dominate the market—despite holding audit costs constant and investors placing a premium on HQ auditor reports. We also find that adding an HQ auditor results in other auditors lowering audit quality. Additional analyses indicate some managers demand lower audit quality to avoid negative audit reports, consistent with loss aversion as a potential explanation. Our findings indicate a need to develop a more comprehensive theory of the demand for auditing. Data Availability: The laboratory market data used in this study are available from the authors upon request.

Frustrated Customers: The Effect of Unexpected Emotional Cues on Yelp Reviews

2021 ◽  
pp. 1-13
Author(s):  
Josh Matti
Keyword(s):  
Loss Aversion ◽  
National Basketball Association ◽  
Emotional Cues ◽  
Consumer Services ◽  
The Impact ◽  
The Phoenix ◽  
Reference Dependent Preferences

This paper explores how emotional cues from unexpected sports outcomes impact consumers’ perception of their experience at local businesses. Using nearly 1 million Yelp reviews from the Phoenix area, I empirically test for the presence of loss aversion and reference-dependent preferences in reviewer behavior. Consistent with loss aversion, unexpected losses lead to worse reviews while there is no effect for unexpected wins. The impact of unexpected losses is concentrated in home games, with no effect for away games. The results also reflect reference-dependent preferences since wins and losses in games predicted to be close do not impact reviewer behavior. Consumer services that cater to National Basketball Association fans (e.g., sports bars) experience pronounced effects.

scholarly journals Loss aversion, overconfidence of investors and their impact on market performance evidence from the US stock markets

2020 ◽  
Vol 25 (50) ◽  
pp. 451-478
Author(s):  
Ahmed Bouteska ◽  
Boutheina Regaieg
Keyword(s):  
Stock Market ◽  
Economic Performance ◽  
Loss Aversion ◽  
Market Performance ◽  
Ordinary Least Squares ◽  
Company Performance ◽  
Service Firms ◽  
Content Type ◽  
The Us ◽  
The Impact

Purpose The current study aims to investigate the impacts of two behavioral biases, namely, loss aversion and overconfidence on the performance of US companies. First, the impact of loss aversion on the economic performance of companies was assessed. Second, the impact of overconfidence on market performance was discussed. Design/methodology/approach This study used around 6,777 quarterly observations on the population of US-insured industrial and services companies over the 2006-2016 period. Ordinary least squares (OLS) regression in two panel data models were used to test the hypotheses formulated for the study. Findings It was documented that the loss-aversion bias negatively affects the economic performance of companies and this is achieved for both sectors. In contrast, the findings suggest that overconfidence positively affects market performance of industrial firms but negatively affects market performance in service firms. Further robust evidence was found that overconfidence bias seems to be dominant, and hence, investors may tend to be more overconfident rather than more loss-averse. Originality/value This research can be extended by focusing on the following question: What is the impact of the contradictory (positive and negative) effects of an investor's loss aversion and overconfidence on the US company performance in case of realization of a stock market crisis or stock market crash?

scholarly journals The Impact of Corporate Performance on Mental Accounting and Loss Aversion in Financial Decisions

2021 ◽  
Vol 12 (4) ◽  
pp. 259
Author(s):  
Mona Hassabelrasoul Mohammad ◽  
Dalal Mohamed Ebrahim Mohamed ◽  
Elsaid Abd Elazim Tolba Elsharkawi
Keyword(s):  
Graduate Students ◽  
Real Estate ◽  
Loss Aversion ◽  
Corporate Performance ◽  
Mental Accounting ◽  
Organization Performance ◽  
Financial Decisions ◽  
Real Estate Company ◽  
The Impact

This study investigates the effect of the organization performance on two psychological biases, mental accounting and aversion to loss, on financial decisions to both investors and managers. To achieve this, two experiments are conducted. The first experiment consists of 40 graduate students as investors, while the second one consists of 40 accountants in a real estate company as managers. The results of the study indicate that the performance of companies impacts both mental accounting and aversion to loss of investors, whereas the performance of companies affects the mental accounting of managers in making their financial decisions but does not affect the aversion to loss.

scholarly journals Incentive Contract Design for the Water-Rail-Road Intermodal Transportation with Travel Time Uncertainty: A Stackelberg Game Approach

Entropy ◽  
2019 ◽  
Vol 21 (2) ◽  
pp. 161
Author(s):  
Wenying Zhang ◽  
Xifu Wang ◽  
Kai Yang
Keyword(s):  
Asymmetric Information ◽  
Travel Time ◽  
Design Problem ◽  
Stackelberg Game ◽  
Contract Design ◽  
Incentive Contracts ◽  
Optimal Time ◽  
Incentive Contract ◽  
Intermodal Transportation ◽  
The Impact

In the management of intermodal transportation, incentive contract design problem has significant impacts on the benefit of a multimodal transport operator (MTO). In this paper, we analyze a typical water-rail-road (WRR) intermodal transportation that is composed of three serial transportation stages: water, rail and road. In particular, the entire transportation process is planned, organized, and funded by an MTO that outsources the transportation task at each stage to independent carriers (subcontracts). Due to the variability of transportation conditions, the travel time of each transportation stage depending on the respective carrier’s effort level is unknown (asymmetric information) and characterized as an uncertain variable via the experts’ estimations. Considering the decentralized decision-making process, we interpret the incentive contract design problem for the WRR intermodal transportation as a Stackelberg game in which the risk-neutral MTO serves as the leader and the risk-averse carriers serve as the followers. Within the framework of uncertainty theory, we formulate an uncertain bi-level programming model for the incentive contract design problem under expectation and entropy decision criteria. Subsequently, we provide the analytical results of the proposed model and analyze the optimal time-based incentive contracts by developing a hybrid solution method which combines a decomposition approach and an iterative algorithm. Finally, we give a simulation example to investigate the impact of asymmetric information on the optimal time-based incentive contracts and to identify the value of information for WRR intermodal transportation.

The Impact of Consumer Loss Aversion on Returns Policies and Supply Chain Coordination

2018 ◽  
Vol 9 (4) ◽  
pp. 1-20 ◽  
Author(s):  
Gulay Samatli-Pac ◽  
Wenjing Shen ◽  
Xinxin Hu
Keyword(s):  
Supply Chain ◽  
Loss Aversion ◽  
Supply Chain Coordination ◽  
Expected Profit ◽  
Lower Price ◽  
Optimal Pricing ◽  
Optimal Price ◽  
Product Return ◽  
Returns Policy ◽  
The Impact

Product return is a common after-sale service. Existing literature has assumed loss neutral consumers, while in practice consumers are often more sensitive to utility losses than gains, i.e., customers are often loss averse. In this paper, we study the impact of such loss aversion on the retailer's optimal pricing and returns policies. We analyze three scenarios where the seller offers no refund, full refund and partial refund for the returned products. Under each scenario, the seller determines the optimal price, quantity, and refund amount (under partial refund case) in order to maximize the expected profit. Our results demonstrate that consumer loss aversion leads a no-refund retailer to charge lower price and order smaller quantity, has no impact on a full-refund retailer, and results in a more lenient returns policy for a partial-refund retailer. We also find contracts that coordinate supply chains selling to loss averse consumers. Therefore, this article sheds some lights on how the management of returns policies should be adapted when consumers are loss averse.

Latin America’s Socioeconomic Relationship With China: Is Development Still Possible?

2019 ◽  
Author(s):  
Enrique Dussel Peters
Keyword(s):  
United States ◽  
21St Century ◽  
The United States ◽  
The Political ◽  
Foreign Direct Investments ◽  
Infrastructure Projects ◽  
Depth Analysis ◽  
Trade Financing ◽  
Triangular Relationships ◽  
The Impact

The socioeconomic and political relationship between Latin America and the Caribbean (LAC) with China has become increasingly significant for both since the beginning of the 21st century. This article analyzes proposals by the United States and China in their bilateral relationship and the political effects of their increasing tensions on LAC. Consistent with the proposed framework of analysis of the socioeconomic LAC–China relationship—at least in terms of trade, financing, overseas foreign direct investments, and infrastructure projects—the article examines in detail these conditions, as well as providing an in-depth example of trade. The final part of the article discusses the important potential and challenges of China for LAC’s development and concludes that so far, and based on the in-depth analysis of the trade relationship, the LAC–China relation is closer to a core-periphery than to a South–South or win–win strategy. The document proposes to understand that the political economy within the United States, particularly of its private sector, have shifted substantially against China. In addition, the structure for analysis of the LAC-China relationship in the 21st century with a concrete structure of analysis in terns of trade, financing, Chinese overseas foreign direct investments (OFDI) and infrastructure projects. In light of current discussions, the analysis suggests for the inclusion of a group of new concepts –such as the “the new triangular relationships” and the “globalization process with Chinese characteristics” with a group of effects in LAC. The impact of the increasing China-United States tensions, from this perspective, generates massive challenges in LAC, independently of their diplomatic relationships to China.

scholarly journals The impact of transport infrastructure projects on sustainable development within a major logistics gateway in North West England

2016 ◽  
Vol 7 (1) ◽  
pp. 28-40 ◽  
Author(s):  
Dimitrios Paraskevadakis ◽  
Alan Bury ◽  
Jin Wang ◽  
Jun Ren ◽  
Stephen Bonsall ◽  
...  
Keyword(s):  
Sustainable Development ◽  
Negative Impact ◽  
Transport Infrastructure ◽  
Quality Data ◽  
Infrastructure Development ◽  
Infrastructure Projects ◽  
The Sustainable Development ◽  
North West ◽  
The North ◽  
The Impact

Abstract In the North West of England the issue of a perceived infrastructure gap is of increasing concern. Investment needs to be made to improve the transport infrastructure of the region if it is to be expected to promote the development of its own regional logistics gateway. Funding tools have been set up to address the challenges arising from the imbalance in infrastructure development that exists between regions in the north of the United Kingdom and those in the south. For regions with well developed economies the outlook is promising as the availability of modern transport infrastructure looks set to improve. However, some sources believe that the development of new transport infrastructure will have a negative impact upon sustainable development. It is expected that this will occur in a range of both direct and indirect ways. As a result, it is critical that planning for the creation of new intermodal transport infrastructure, or the upgrading of that which already exists, takes into account the impact that these developments will have on the sustainable development of the host region. A scenario based development methodology is proposed in this paper. It was developed to provide a way to identify potential scenarios that may arise within a given region as a result of transport infrastructure projects. To create significant scenarios the methodology is dependent on the availability of a sufficient quantity of quality data. For this paper that data was collected through a focus group composed of stakeholders from the region in question. This was further supported by the performance of an impact survey using the same group of stakeholders.

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