scholarly journals Eliciting Risk Preferences Experimentally versus Using a General Risk Question. Does Financial Literacy Bridge the Gap?

Risks ◽  
2021 ◽  
Vol 9 (8) ◽  
pp. 140
Author(s):  
Calvin Mudzingiri ◽  
Ur Koumba
Keyword(s):  
Financial Literacy ◽  
Financial Risk ◽  
Risk Preferences ◽  
Random Effect ◽  
Risk Preference ◽  
Self Report ◽  
Panel Regression ◽  
Test Analysis ◽  
Seeking Behavior ◽  
The Stability

The study investigates the stability of financial risk preference choices elicited from subjects by way of two methods, namely: experimentally elicited incentivized revealed risk preferences (IRRP) and (self-reported) perceived willingness to take a financial risk (PWTFR). The research further examines whether financial literacy (a human capital aspect) helps in reducing the gap between IRRP and PWTFR choices made by subjects. A total of 193 university students (where 53% were female) participated in the study. The subjects completed IRRP choices from four multiple price list (MPL) risk preference tasks and a financial literacy questionnaire. There is a tendency to anchor at extremes of risk-seeking behavior when subjects self-report their PWTFR choices. A paired t-test analysis of the two methods shows that the average responses from the two methods are significantly different. A random effect (RE) panel regression shows that an increase in financial literacy narrows the gap between IRRP and PWTFR choices. The study’s findings show that responses by subjects from a PWTFR general risk question (GRQ) and IRRP experiment are unstable and inconsistent. What people say in a survey does not always translate into what they do when faced with a risk preference choice dilemma. Financial literacy helps individuals to predict their risk attitudes more precisely.

The Performance of Time-Preference and Risk-Preference Measures in Surveys

2021 ◽  
Author(s):  
Joshua Tasoff ◽  
Wenjie Zhang
Keyword(s):  
Time Preference ◽  
Risk Preferences ◽  
Risk Preference ◽  
Time Preferences ◽  
Self Report ◽  
Data Set ◽  
Financial Decisions ◽  
Wide Range ◽  
Substantial Heterogeneity ◽  
Report Measure

Time preferences and risk preferences play an important role in a wide range of behavior, including financial decisions, entrepreneurship, and the proper incentivizing of agents. Numerous methods have been developed to measure these preferences hypothetically in surveys, but they have yielded inconsistent results. We analyze a panel data set in which subjects have collectively answered more than 400 surveys including 15 time-preference and 36 risk-preference elicitations. We evaluate the performance of these measures using the criteria of (1) ability to predict economically important behavior and (2) distinctness from other observables. We find substantial heterogeneity in the predictiveness of the measures. The best performing measure for time-preference is a titration method, in which a sequence of adaptive binary-choice questions narrows in on a subject’s indifference point, and for risk-preference it is a self-report measure of risk aversion. Using factor analysis, we find that time preferences are well explained by a single factor, but risk preferences load on multiple factors. However, the first factor loads almost entirely on self-reported risk-preference measures, and this factor explains much of the variation. The evidence can help inform researchers about which elicitation methods to include in their surveys. This paper was accepted by Yan Chen, decision analysis.

scholarly journals Bank’s Stability through Risk Factors Growth and Capital Ratio: Evidence from Kuwait

2018 ◽  
Vol 8 (10) ◽  
pp. 361-376
Author(s):  
Ahmed Nahar Al Hussaini
Keyword(s):  
Risk Factors ◽  
Economic Growth ◽  
Regression Models ◽  
Critical Role ◽  
Random Effect ◽  
Panel Regression ◽  
Total Expenditure ◽  
Time Period ◽  
The Stability ◽  
Panel Regression Models

The objective of present study is to examine the effect of risk factors, and capital ratio along business and economic growth in stability of the banks in the case of Kuwait. For this purpose, 10 banks are selected for time period of 2010 to 2016, with the annual observations. Panel regression models like fixed and random effect are applied to check the significance of selected predictors on outcome factors of the study. The results of the study explain that there exists a significant impact of risk factors like liquidity and credit on the stability of the selected banks in the region of Kuwait. In addition, operational efficiency in the form of total expenditure as percent of total assets are also playing critical role. This study is contributing in existing literature from the context of stability and risk with the provision of some useful results.

scholarly journals Improved Rice Technology Adoption: The Role of Spatially-Dependent Risk Preference

Agriculture ◽  
2021 ◽  
Vol 11 (8) ◽  
pp. 691
Author(s):  
Omotuyole Isiaka Ambali ◽  
Francisco Jose Areal ◽  
Nikolaos Georgantzis
Keyword(s):  
Field Experiments ◽  
Climatic Factors ◽  
Risk Preferences ◽  
Risk Preference ◽  
Probit Model ◽  
Climatic Conditions ◽  
High Yield ◽  
Risk Attitudes ◽  
Policy Action ◽  
Rice Varieties

This study analyses farmers’ adoption of improved rice technology, taking into account farmers’ risk preferences; the unobserved spatial heterogeneity associated with farmers’ risk preferences; farmers’ household and farm characteristics; farm locations, farmers’ access to information, and their perceptions on the rice improved varieties (i.e., high yield varieties, HYV). The study used data obtained from field experiments and a survey conducted in 2016 in Nigeria. An instrumental-variable probit model was estimated to account for potential endogenous farmers’ risk preference in the adoption decision model. Results show that risk averse (risk avoidant) farmers are less likely to adopt HYV, with the spatial lags of farmers’ risk attitudes found to be a good instrument for spatially unobserved variables (e.g., environmental and climatic factors). We conclude that studies supporting policy action aiming at the diffusion of improved rice varieties need to collect information, if possible, on farmers’ risk attitudes, local environmental and climatic conditions (e.g., climatic, topographic, soil quality, pest incidence) in order to ease the design and evaluation of policy actions on the adoption of improved agricultural technology.

Demographic Variables, Delay Discounting Models and Dysfunctional Personality Traits as Predictors of Financial Risk-Tolerance Among Community-Dwelling Italian Adults

2021 ◽  
pp. 026010792110321
Author(s):  
Antonella Somma ◽  
Rebecca Sergi ◽  
Chiara Pagliara ◽  
Clelia Di Serio ◽  
Andrea Fossati
Keyword(s):  
Personality Traits ◽  
Linear Combination ◽  
Delay Discounting ◽  
Financial Risk ◽  
Short Form ◽  
Demographic Variables ◽  
Risk Tolerance ◽  
Community Dwelling ◽  
Self Report ◽  
Financial Risk Tolerance

To evaluate the effect of demographic variables, delay discounting and dysfunctional personality traits on financial risk tolerance (FRT), 281 community-dwelling adults were administered the Italian translations of the Risk-Tolerance Scale (RTS), Monetary Choice Questionnaire, Probability Discounting Questionnaire, and Personality Inventory for DSM-5-Short Form (PID-5-SF) self-report questionnaires through an online platform. Hierarchical robust regression results showed that the linear combination of demographic variables (gender and active worker status), delay discounting measures and selected PID-5-SF trait scale scores (i.e., Attention Seeking and Risk Taking) explained roughly 39% of the RTS total score. As a whole, our findings underscore the role of demographic characteristics, dysfunctional personality traits and delay discounting in FRT expression. As a result, FRT is likely to represent the linear combination of several factors that should be assessed in order to understand FRT and prevent erroneous choices among lay investors.

Borderline Personality Disorder: Associations Between Dimensional Personality Profiles and Self-Destructive Behaviors

2019 ◽  
Vol 33 (2) ◽  
pp. 249-261 ◽  
Author(s):  
Katharina Kolbeck ◽  
Steffen Moritz ◽  
Julia Bierbrodt ◽  
Christina Andreou
Keyword(s):  
Borderline Personality Disorder ◽  
Personality Disorder ◽  
Factor Model ◽  
Five Factor Model ◽  
Risk Preference ◽  
Borderline Personality ◽  
Self Report ◽  
Personality Profiles ◽  
Ongoing Research ◽  
Destructive Behaviors

Ongoing research is shifting towards a dimensional understanding of borderline personality disorder (BPD). Aim of this study was to identify personality profiles in BPD that are predictive of self-destructive behaviors. Personality traits were assessed (n = 130) according to the five-factor model of personality (i.e., Neuroticism, Extraversion, Openness to Experience, Agreeableness, Conscientiousness) and an additional factor called Risk Preference. Self-destructive behavior parameters such as non-suicidal self-injury (NSSI) and other borderline typical dyscontrolled behaviors (e.g., drug abuse) were assessed by self-report measures. Canonical correlation analyses demonstrated that Neuroticism, Extraversion, and Conscientiousness are predictors of NSSI. Further, Neuroticism, Agreeableness, and Risk Preference were associated with dyscontrolled behaviors. Our results add further support on personality-relevant self-destructive behaviors in BPD. A combined diagnostic assessment could offer clinically meaningful insights about the causes of self-destruction in BPD to expand current therapeutic repertoires.

Respondents in Asian Cultures (e.g., Chinese) are More Risk-Seeking and More Overconfident than Respondents in Other Cultures (e.g., in United States) but the Reciprocal Predictions are in Total Opposition: How and Why?

2004 ◽  
Vol 4 (2) ◽  
pp. 263-292 ◽  
Author(s):  
Shu Li ◽  
Yongqing Fang
Keyword(s):  
United States ◽  
Social Network ◽  
Risk Taking ◽  
Risk Preferences ◽  
Risk Preference ◽  
Cross Cultural ◽  
Cultural Variations ◽  
Risk Seeking ◽  
The Social ◽  
Predicted Risk

AbstractTriggered by rather surprising findings that respondents in Asian cultures (e.g., Chinese) are more risk-seeking and more overconfident than respondents in other cultures (e.g., in United States) and that the reciprocal predictions are in total opposition, four experiments were designed to extend previous collective-culture oriented researches. Results revealed that (1) Singapore 21, which is a vision of Singapore in the 21st century and has highlighted the promotion of a collective culture, did not advocate greater risk-seeking but led to weaker overconfidence; (2) the knowledge of "financial help from social network" did not permit prediction of risk preference but the knowledge of "the value difference between possible outcomes" did; (3) the social network could be viewed not only as a positive "cushion" but also as a negative "burden" in both gain and loss domains of risky choices; (4) the predictions of the risk-as-value, risk-as-feelings and stereotype hypotheses were not consistent with the predicted risk preferences of others but the predictions of the economic-performance hypothesis were consistent with the predicted risk preferences as well as the predicted overconfidence of others. The implications for cross-cultural variations in overconfidence and for cross-cultural variations in risk-taking were discussed.

scholarly journals The stability of children??s physical activity as measured by accelerometry and self-report

1995 ◽  
Vol 27 (9) ◽  
pp. 1326???1332 ◽  
Author(s):  
KATHLEEN F. JANZ ◽  
JOHN WITT ◽  
LARRY T. MAHONEY
Keyword(s):  
Physical Activity ◽  
Self Report ◽  
The Stability

scholarly journals Through the Window of My Mind: Mapping Information Integration and the Cognitive Representations Underlying Self-Reported Risk Preference

2019 ◽  
Author(s):  
Markus D. Steiner ◽  
Florian Ismael Seitz ◽  
Renato Frey
Keyword(s):  
Information Integration ◽  
Cognitive Modeling ◽  
Risk Preferences ◽  
Temporal Stability ◽  
Internal Validity ◽  
Risk Preference ◽  
Cognitive Representations ◽  
Strength Of Evidence ◽  
Trade Offs ◽  
Self Reports

A person’s risk preference may determine significant life outcomes (e.g., in finance or health). People are therefore routinely asked to report their risk preferences in various scientific and applied contexts, yet still little is known concerning the cognitive underpinnings of this judgment-formation process. We ran two studies (N = 250, and N = 150 in a retest) implementing the process-tracing method of aspect listing to investigate the information- integration processes underlying people’s self-reports by means of cognitive modeling (RQ1) and to examine people’s cognitive representations of their risk preferences (RQ2). Our analyses indicate that interindividual differ- ences in self-reported risk preferences can be modeled well based on the listed aspects’ properties of evidence, and substantially better than using sociodemographic variables as predictors. Specifically, to render self-reports people appear to integrate the strength of evidence of multiple aspects sam- pled from memory. These aspects—that is, people’s cognitive representation of their risk preferences—mostly referred to the magnitudes of outcomes, and in line with a risk–return perspective, often explicitly referred to trade-offs between positive and negative outcomes. Crucially, within participants the strength of evidence of the listed aspects remained highly stable across the two studies (RQ3), and changes therein were closely related to changes in self-reported risk preference (RQ4). In sum, our findings provide cognitive insights concerning how people render self-reports of their risk preferences, suggest an explanation for the well-documented temporal stability thereof, and thus corroborate the internal validity of this measurement approach.

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