Personality economics: An investigation of how personality develops and how it predicts decisions

<p>This thesis is the product of three research papers, of which each one forms a paper of this thesis. In thefirst paper, I study how people’s personality evolves and whether it is shaped by family dynamics,specifically by the sex of one’s siblings. Researchers developed a good understanding of the importanceof personality for people’s lives but know very little how this personality is shaped. The first paperinvestigates whether growing up with a sister instead of a brother might be a cause of different personalitydevelopment. In the second paper, I study two specific personality traits, locus of control and risktolerance, as predictors of decisions under risk. Although we know risk is a crucial part of our lives, we stillhave not determined how to define and measure risk attitudes properly. The second paper delves deeperinto this topic and shows how risk tolerance and locus of control predict risky decisions in an experimentand in real-world choices and gives some additional insight into the measurement of risk attitudes. In thispaper I also studied other personality traits, which turned out to have no important role with regards todecisions under risk. In the third and last paper, I study property insurance decisions with data collectedin an experiment. I designed and coded the experiment and collected this data partially in a computer laband partially online. This project investigates what behavioral and financial factors influence propertyinsurance decisions, especially the choice to insure with fixed-price long-term contracts.</p>

Personality economics: An investigation of how personality develops and how it predicts decisions

<p>This thesis is the product of three research papers, of which each one forms a paper of this thesis. In thefirst paper, I study how people’s personality evolves and whether it is shaped by family dynamics,specifically by the sex of one’s siblings. Researchers developed a good understanding of the importanceof personality for people’s lives but know very little how this personality is shaped. The first paperinvestigates whether growing up with a sister instead of a brother might be a cause of different personalitydevelopment. In the second paper, I study two specific personality traits, locus of control and risktolerance, as predictors of decisions under risk. Although we know risk is a crucial part of our lives, we stillhave not determined how to define and measure risk attitudes properly. The second paper delves deeperinto this topic and shows how risk tolerance and locus of control predict risky decisions in an experimentand in real-world choices and gives some additional insight into the measurement of risk attitudes. In thispaper I also studied other personality traits, which turned out to have no important role with regards todecisions under risk. In the third and last paper, I study property insurance decisions with data collectedin an experiment. I designed and coded the experiment and collected this data partially in a computer laband partially online. This project investigates what behavioral and financial factors influence propertyinsurance decisions, especially the choice to insure with fixed-price long-term contracts.</p>

The Willingness to Pay for a Hypothetical Vaccine for the Coronavirus Disease 2019 (COVID-19)

This study investigates how people in Japan perceived the severity of and probability of infection from coronavirus disease 2019 (COVID-19), and how their willingness to purchase a hypothetical vaccine depends on these perceptions and their risk attitudes. We conducted a large-scale panel survey three times between 13 March to 13 April 2020 in Japan. By analyzing the data, we found that the perception of COVID-19 became more serious. The estimation of the fixed effect model reveals that a person becomes more willing to pay for a vaccine as the person evaluates COVID-19 as a more severe disease, considers a higher probability of infection, and becomes more risk averse. Since the sensitivity of willingness to pay for the vaccine on risk aversion increased during the period, the change in risk attitude contributed to an increase in willingness through the sensitivity channel, while it decreased through the magnitude channel.

Risk aversion over finite domains

We investigate risk attitudes when the underlying domain of payoffs is finite and the payoffs are, in general, not numerical. In such cases, the traditional notions of absolute risk attitudes, that are designed for convex domains of numerical payoffs, are not applicable. We introduce comparative notions of weak and strong risk attitudes that remain applicable. We examine how they are characterized within the rank-dependent utility model, thus including expected utility as a special case. In particular, we characterize strong comparative risk aversion under rank-dependent utility. This is our main result. From this and other findings, we draw two novel conclusions. First, under expected utility, weak and strong comparative risk aversion are characterized by the same condition over finite domains. By contrast, such is not the case under non-expected utility. Second, under expected utility, weak (respectively: strong) comparative risk aversion is characterized by the same condition when the utility functions have finite range and when they have convex range (alternatively, when the payoffs are numerical and their domain is finite or convex, respectively). By contrast, such is not the case under non-expected utility. Thus, considering comparative risk aversion over finite domains leads to a better understanding of the divide between expected and non-expected utility, more generally, the structural properties of the main models of decision-making under risk.

Comparing Three Countries’ Higher Education Students’ Cyber Related Perceptions and Behaviours during COVID-19

In 2020, a global pandemic led to lockdowns, and subsequent social and business restrictions. These required overnight implementation of emergency measures to permit continued functioning of vital industries. Digital technologies and platforms made this switch feasible, but it also introduced several cyber related vulnerabilities, which students might not have known how to mitigate. For this study, the Global Cyber Security Index and the Cyber Risk literacy and education index were used to provide a cyber security context for each country. This research project—an international, cross-university, comparative, quantitative project—aimed to explore the risk attitudes and concerns, as well as protective behaviours adopted by, students at a South African, a Welsh and a Hungarian University, during the pandemic. This study’s findings align with the relative rankings of the Oliver Wyman Risk Literacy and Education Index for the countries in which the universities reside. This study revealed significant differences between the student behaviours of students within these universities. The most important differences were identified between students’ risk attitudes and concerns. It was also discovered that South African students reported having changed their protective online behaviours to the greatest extent, since the pandemic commenced. Recommendations are made suggesting that cyber security training and education, as well as improving the digital trust and confidence in digital platforms, are critical.

Reliable population utility signal from diverse economic value coding in orbitofrontal neurons

Economic value encapsulates the subjective combination of reward magnitude and probability. We investigated the mechanism for subjective value computation in single neurons using an economic axiomatic approach. We found that single neurons in the macaque orbitofrontal cortex, known to be sensitive to reward magnitude and probability, encode the economic value functions (utility and probability weighting) in a heterogeneous manner, such that the activity of individual neurons did not match the animal's choices. However, the utility and probability weighting code from a population of these varied neurons reliably matched the animals' choices and risk attitudes. Thus, the neuronal population code for economic value amounted to a distributional representation of the formal economic functions. With a diverse single-unit economic value code converging into a reliable population-level utility code, this scheme suggests a brain mechanism for the flexible accommodation of multiple choice patterns and risk attitudes.

Cumulative lifetime stress exposure assessed by the STRAIN predicts economic ambiguity aversion

Uncertainty is inherent in most decisions humans make. Economists distinguish between twotypes of decision-making under non-certain conditions: those involving risk (i.e., knownoutcome probabilities) and those that involve ambiguity (i.e., unknown outcome probabilities).Prior work has identified individual differences that explain risk preferences, but less is knownabout factors associated with ambiguity aversion. Here, we hypothesized that cumulativeexposure to major stressors over the lifespan might be one factor that predicts an individuals’ambiguity aversion. Across two studies (Study 1: n = 58, Mean age = 25.7; Study 2: n = 188, Mean age =39.81), we used a comprehensive lifetime stress exposure inventory (i.e., the Stress andAdversity Inventory for Adults, or STRAIN) and a standard economic approach to quantify riskand ambiguity preferences. Greater lifetime stress exposure as measured by the STRAIN,particularly in early life, was associated with higher aversion to ambiguity but not risk attitudes.