Domain-specific risk-taking among finance professionals
TLDR
In this paper, the authors investigate whether the domain effect is also present among experienced employees in the finance industry and compare their decisions with people from the general population, and they find that professionals are even more reluctant to sell loser stocks than nonprofessionals.About:
This article is published in Journal of Behavioral and Experimental Finance.The article was published on 2020-09-01 and is currently open access. It has received 9 citations till now. The article focuses on the topics: Experimental finance & Population.read more
Citations
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Economics language and assumptions: How theories can become self-fulfilling
TL;DR: The authors argue that theories can "win" in the marketplace for ideas independently of their empirical validity to the extent that their assumptions and language become taken for granted, normatively valued, and therefore, create conditions that make the theories come "true."
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Credence goods in the literature: What the past fifteen years have taught us about fraud, incentives, and the role of institutions
TL;DR: In this article, the authors review the literature on credence goods and briefly discuss evidence on the extent of fraud in various markets for credence products and discuss recent developments in this area of research.
Volatility shocks and investment behavior | Market shocks and professionals' investment behavior – Evidence from the COVID-19 crash
TL;DR: In this paper, the authors investigate how the experience of stock market shocks, like the COVID-19 crash, influences risk taking behavior, and find that people who do not change risky behavior are actually not invested.
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The role of diagnostic ability in markets for expert services
TL;DR: In this paper, the authors show that efficient market outcomes are always possible when experts are heterogeneous in their diagnostic abilities, but that inefficient equilibria can also exist when a large share of high-ability experts can lead to more inefficiencies relative to the efficient equilibrium.
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Active and Passive Risk-Taking
TL;DR: The authors developed a new experimental risk-elicitation procedure, the Dynamic Lottery Adjustment Task, and employed it across two separate experiments to study the size and direction of potential mode-of-choice effects (i.e. differences in risk-taking between active and passive decision modes).
References
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Book ChapterDOI
Prospect theory: an analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
TL;DR: In this paper, the authors present a critique of expected utility theory as a descriptive model of decision making under risk, and develop an alternative model, called prospect theory, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights.
Journal ArticleDOI
Prospect theory: analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
Journal ArticleDOI
The Framing of Decisions and the Psychology of Choice
Amos Tversky,Daniel Kahneman +1 more
TL;DR: The psychological principles that govern the perception of decision problems and the evaluation of probabilities and outcomes produce predictable shifts of preference when the same problem is framed in different ways.
Journal ArticleDOI
Advances in prospect theory: cumulative representation of uncertainty
Amos Tversky,Daniel Kahneman +1 more
TL;DR: Cumulative prospect theory as discussed by the authors applies to uncertain as well as to risky prospects with any number of outcomes, and it allows different weighting functions for gains and for losses, and two principles, diminishing sensitivity and loss aversion, are invoked to explain the characteristic curvature of the value function and the weighting function.
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Choices, Values, and Frames
Daniel Kahneman,Amos Tversky +1 more
TL;DR: Prospect theory as mentioned in this paper is an alternative to the classical utility theory of choice, and has been used to explain many complex, real-world puzzles, such as the principles of legal compensation, the equity premium puzzle in financial markets, and the number of hours that New York cab drivers choose to drive on rainy days.
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Investment Risk Behavior in Different Domains: Entrepreneurs vs. Public Employees
Massimo Franco,Nicola D'angelo +1 more
Does Good Advice Come Cheap? –– On the Assessment of Risk Preferences in the Lab and the Field
Andrea Leuermann,Benjamin Roth +1 more