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Behavioral finance research has almost exclusively investigated the decision making of lay individuals, mostly ignoring more sophisticated institutional investors. The…
Behavioral finance research has almost exclusively investigated the decision making of lay individuals, mostly ignoring more sophisticated institutional investors. The purpose of this paper is to better understand the relatively unexplored field of investment decisions made by pension fund trustees, an important subset of institutional investors, and identify future avenues of further exploration.
This paper starts by setting out the landscape in which pension fund trustees operate and make their decisions, followed by a literature review of the extant behavioral finance research applicable to similar situations.
Despite receiving training and accumulating experience in financial markets, these are limited and sparse; therefore, pension fund trustees are unlikely to be immune from behavioral biases. Trustees make decisions in groups, are heavily reliant on advice and make decisions on behalf of others. Research in those areas has uncovered many inefficiencies. It is still unknown how this specific context can affect the psychological effects on their decisions.
Given how much influence trustees’ decisions have on asset allocation and by extension in financial markets, this is a surprising state of affairs. Research in behavioral finance has had a marked influence on policy in the past and so we anticipate that exploring the decisions made within pension funds may have wide ramifications for the industry.
As far as the authors are aware, no behavioral research has empirically tested pension fund trustees’ decisions to investigate how the combination of group decisions, advice and surrogacy influence their decisions and, ultimately, the sustainability of our pensions.
Purpose: Risk is a multifaceted concept, and its identification requires complex approaches that are often misunderstood. The consequence is that decisions are based on…
Purpose: Risk is a multifaceted concept, and its identification requires complex approaches that are often misunderstood. The consequence is that decisions are based on limited perception rather than the full value and meaning of what risk is, as a result, the way it is being tackled is incorrect. The individuals are often limited in their perceptions and ideas and do not embrace the full multifaceted nature of risk. Regulators and individuals want to follow norms and checklists or overuse models, simulations, and templates, thereby reducing responsibility for decision-making. At the same time, the wider use of technology and rules reduces the critical thinking of individuals. We advance the automation process by building robots that follow protocols and forget about the part of risk assessment that cannot be programed. Therefore, with this study, the objective of this study was to discover how people define risk, the influencing factors of risk perception and how they behave toward this perception. The authors also determine how the perception differed with age, gender, marital status, education level and region. The novelty of the research is related to individual risk perception during COVID-19, as this is a new and unknown phenomenon. Methodology: The research is based on the analysis of the self-administered purposely designed questionnaires we distributed across different social media platforms between February and June 2020 in Europe and in some cases was carried out as a interview over communication platforms such as “Skype,” “Zoom” and “Microsoft Teams.” The questionnaire was divided into four parts: Section 1 was designed to collect demographic information from the participants; Section 2 included risk definition statements obtained from literature and a preliminary discussion with peers; Section 3 included risk behavior statements; and Section 4 included statements on risk perception experiences. A five-point Likert Scale was provided, and participants were required to answer along a scale of “1” for “Strongly Agree” to “5” for “Strongly Disagree.” Participants also had the option to elaborate further and provide additional comments in an open-ended box provided at the end of the section. 466 valid responses were received. Thematic analysis was carried out to analyze the interviews and the open-ended questions, while the questionnaire responses were analyzed using various quantitative methods on IBM SPSS (version 23). Findings: The results of the analysis indicate that individuals evaluate the risk before making a decision and view risk as both a loss and opportunity. The study identifies nine factors influencing risk perception. Nevertheless, it must be emphasized that we can continue to develop models and rules, but as long as the risk is not understood, we will never achieve anything.
Internet fraud is an epidemic that costs US$7.1 billion as of 2007. The advent of the internet and proliferation of its use makes it an attractive medium for communicating…
Internet fraud is an epidemic that costs US$7.1 billion as of 2007. The advent of the internet and proliferation of its use makes it an attractive medium for communicating the fraud, particularly through the use of e‐mail. This paper aims to explain how victims of online fraud can be influenced by judgmental heuristics and cognition when they make nonnormative or sub‐optimal decisions.
The paper will analyse the content of 14 recent fraud e‐mails to explain how victims of online fraud can be influenced from a psychological perspective, using theories of bounded rationality, judgmental heuristics and cognition.
The paper suggests that e‐mail fraudsters, whether intentionally or not, employ specific methods that correspond closely to how the human mind works within a context of bounded rationality. These methods have a propensity to exploit psychological blind spots in victims caused by selective perception and post‐decisional dissonance, as well as sub‐optimal or nonnormative responses in automatic behaviour due to the common use of heuristics (for example, representativeness, availability and affect) when making decisions in complex task environments.
Considering the current and widespread problem of online fraud, this paper is expected to inform and prepare internet users against such deception by offering a better understanding of how fraudsters can psychologically influence the way victims and potential victims make their decisions.
The literature about the development of information systems tends to concentrate on methodologies, techniques and tools. There is significant published research about the…
The literature about the development of information systems tends to concentrate on methodologies, techniques and tools. There is significant published research about the potential negative aspects of using methodologies and tools (along with that discussing their potential benefits). Techniques, on the other hand, are seen largely as benign, very often as simple aids to help carry out a task, and are used in many methodologies. They might be seen as supporting the collection, collation, analysis, representation or communication of information about system requirements and attributes (or a combination of these). However, it is argued in this paper that techniques also have negative aspects and there are as many dangers in their use as in using methodologies and tools. In particular, techniques may restrict understanding by framing the ways of thinking about the problem situation. In other words, people’s understanding of a problem can be profoundly influenced by how the problem is presented to them by the technique. Different development techniques can represent the same problem situation differently, and the way in which it is represented has considerable potential for influencing problem understanding and resultant decision making. Drawing on the cognitive psychology literature enables one to show how specific visual and linguistic characteristics of techniques may influence problem understanding. In addition, examining the taken‐for‐granted paradigm of a particular technique provides a further dimension influencing problem understanding. This knowledge of visual/language and paradigm attributes is applied to over 80 techniques used to a greater or lesser extent in IS development, indicating how different types of technique are likely to influence problem cognition. This serves two purposes. First, it exposes potential biases of a particular technique and makes users aware of the potential dangers. Second, the overall categorization may provide guidance to users in selecting appropriate techniques and combinations of techniques to help reduce any negative framing influences, provide a more holistic view of a problem situation and support a more appropriate problem‐learning environment.
A discussion “ On the Neglect of Science in Commerce and Industry ” seems to involve the assumption that this neglect is general if not total. As this would be an exaggeration, I prefer to speak of the inadequate appreciation of science in the British commercial and industrial world. During the last thirty years immense efforts have been made to provide instruction in physical science for all classes in the community, and with some success. Every British university is provided with laboratories and gives degrees in science; the number of colleges and technical schools has increased enormously, and the quality of the teaching provided has greatly improved, while there are but few secondary schools which are not furnished with good laboratories in which physical science is taught up to a comparatively advanced stage. Out of these universities, colleges, and schools proceed annually many hundreds of young people with a tincture of scientific knowledge, some of them possessing even a certain amount of practical skill and experience. I do not refer to engineers whose training and professional qualifications require separate discussion.
[There are thousands of lists of books on special subjects, and nothing more is attempted here than to indicate the most useful. For other lists and bibliographies, reference must be made to the works in Section I. The catalogues of special libraries and the numerous lists of books on special subjects contributed to professional magazines must also be sought for there.]
DONCASTER'S new Central Library was formally opened on 29th December 1969 on precisely the 100th anniversary of the opening of the first public library in Doncaster. Conforming to tradition, the Library was opened by the Mayor of Doncaster, Councillor Marcus Outwin. The President of the Library Association, Mr. Wilfred Ashworth, addressed the assembled guests, his last official appointment before relinquishing the office.
The paper starts with a description of a risk management model more suited to the current business environment. Key to the introduction of the model is the success of…
The paper starts with a description of a risk management model more suited to the current business environment. Key to the introduction of the model is the success of organizational communication and culture. Aspects of culture are explained using cultural theory. This is followed by a discussion of the critical role of communication, and the theory of the social amplification of risk is presented and analysed. From here the paper moves to the development of a framework explaining communications behaviour during crisis. The notions of structural distortion and communications degradation during crises are used to explain behavioural (cultural changes) distortion. Total risk management is presented as a notional solution to these problems.