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Article
Publication date: 19 June 2020

Wing-Keung Wong

This paper aims to give a brief review on behavioral economics and behavioral finance and discusses some of the previous research on agents' utility functions, applicable…

Abstract

Purpose

This paper aims to give a brief review on behavioral economics and behavioral finance and discusses some of the previous research on agents' utility functions, applicable risk measures, diversification strategies and portfolio optimization.

Design/methodology/approach

The authors also cover related disciplines such as trading rules, contagion and various econometric aspects.

Findings

While scholars could first develop theoretical models in behavioral economics and behavioral finance, they subsequently may develop corresponding statistical and econometric models, this finally includes simulation studies to examine whether the estimators or statistics have good power and size. This all helps us to better understand financial and economic decision-making from a descriptive standpoint.

Originality/value

The research paper is original.

Details

Studies in Economics and Finance, vol. 37 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

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Book part
Publication date: 20 November 2018

Dorian Jullien

This chapter conducts a systematic comparison of behavioral economics’s challenges to the standard accounts of economic behaviors within three dimensions: under risk, over…

Abstract

This chapter conducts a systematic comparison of behavioral economics’s challenges to the standard accounts of economic behaviors within three dimensions: under risk, over time, and regarding other people. A new perspective on two underlying methodological issues, i.e., inter-disciplinarity and the positive/normative distinction, is proposed by following the entanglement thesis of Hilary Putnam, Vivian Walsh, and Amartya Sen. This thesis holds that facts, values, and conventions have inter-dependent meanings in science which can be understood by scrutinizing formal and ordinary language uses. The goal is to provide a broad and self-contained picture of how behavioral economics is changing the mainstream of economics.

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Book part
Publication date: 28 September 2015

Md Shah Azam

Information and communications technology (ICT) offers enormous opportunities for individuals, businesses and society. The application of ICT is equally important to…

Abstract

Information and communications technology (ICT) offers enormous opportunities for individuals, businesses and society. The application of ICT is equally important to economic and non-economic activities. Researchers have increasingly focused on the adoption and use of ICT by small and medium enterprises (SMEs) as the economic development of a country is largely dependent on them. Following the success of ICT utilisation in SMEs in developed countries, many developing countries are looking to utilise the potential of the technology to develop SMEs. Past studies have shown that the contribution of ICT to the performance of SMEs is not clear and certain. Thus, it is crucial to determine the effectiveness of ICT in generating firm performance since this has implications for SMEs’ expenditure on the technology. This research examines the diffusion of ICT among SMEs with respect to the typical stages from innovation adoption to post-adoption, by analysing the actual usage of ICT and value creation. The mediating effects of integration and utilisation on SME performance are also studied. Grounded in the innovation diffusion literature, institutional theory and resource-based theory, this study has developed a comprehensive integrated research model focused on the research objectives. Following a positivist research paradigm, this study employs a mixed-method research approach. A preliminary conceptual framework is developed through an extensive literature review and is refined by results from an in-depth field study. During the field study, a total of 11 SME owners or decision-makers were interviewed. The recorded interviews were transcribed and analysed using NVivo 10 to refine the model to develop the research hypotheses. The final research model is composed of 30 first-order and five higher-order constructs which involve both reflective and formative measures. Partial least squares-based structural equation modelling (PLS-SEM) is employed to test the theoretical model with a cross-sectional data set of 282 SMEs in Bangladesh. Survey data were collected using a structured questionnaire issued to SMEs selected by applying a stratified random sampling technique. The structural equation modelling utilises a two-step procedure of data analysis. Prior to estimating the structural model, the measurement model is examined for construct validity of the study variables (i.e. convergent and discriminant validity).

The estimates show cognitive evaluation as an important antecedent for expectation which is shaped primarily by the entrepreneurs’ beliefs (perception) and also influenced by the owners’ innovativeness and culture. Culture further influences expectation. The study finds that facilitating condition, environmental pressure and country readiness are important antecedents of expectation and ICT use. The results also reveal that integration and the degree of ICT utilisation significantly affect SMEs’ performance. Surprisingly, the findings do not reveal any significant impact of ICT usage on performance which apparently suggests the possibility of the ICT productivity paradox. However, the analysis finally proves the non-existence of the paradox by demonstrating the mediating role of ICT integration and degree of utilisation explain the influence of information technology (IT) usage on firm performance which is consistent with the resource-based theory. The results suggest that the use of ICT can enhance SMEs’ performance if the technology is integrated and properly utilised. SME owners or managers, interested stakeholders and policy makers may follow the study’s outcomes and focus on ICT integration and degree of utilisation with a view to attaining superior organisational performance.

This study urges concerned business enterprises and government to look at the environmental and cultural factors with a view to achieving ICT usage success in terms of enhanced firm performance. In particular, improving organisational practices and procedures by eliminating the traditional power distance inside organisations and implementing necessary rules and regulations are important actions for managing environmental and cultural uncertainties. The application of a Bengali user interface may help to ensure the productivity of ICT use by SMEs in Bangladesh. Establishing a favourable national technology infrastructure and legal environment may contribute positively to improving the overall situation. This study also suggests some changes and modifications in the country’s existing policies and strategies. The government and policy makers should undertake mass promotional programs to disseminate information about the various uses of computers and their contribution in developing better organisational performance. Organising specialised training programs for SME capacity building may succeed in attaining the motivation for SMEs to use ICT. Ensuring easy access to the technology by providing loans, grants and subsidies is important. Various stakeholders, partners and related organisations should come forward to support government policies and priorities in order to ensure the productive use of ICT among SMEs which finally will help to foster Bangladesh’s economic development.

Details

E-Services Adoption: Processes by Firms in Developing Nations
Type: Book
ISBN: 978-1-78560-325-9

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Article
Publication date: 28 June 2019

Venkata Narasimha Chary Mushinada and Venkata Subrahmanya Sarma Veluri

The purpose of this paper is to empirically test the relationship between investors’ rationality and behavioural biases like self-attribution, overconfidence.

Abstract

Purpose

The purpose of this paper is to empirically test the relationship between investors’ rationality and behavioural biases like self-attribution, overconfidence.

Design/methodology/approach

The study applies structural equation modelling to understand whether individual investors, besides being rational, are subjected to self-attribution bias and overconfidence bias.

Findings

The study shows the empirical evidence in the support of behavioural biases like self-attribution and overconfidence existing besides investors’ rationality. Moreover, there is a statistically significant positive covariance found between self-attribution and overconfidence, implying that an increase/decrease in self-attribution results in the increase/decrease in overconfidence and vice versa. It is also observed that the personal characteristics of an investor such as gender, age, occupation, annual income and their trading experience have an impact on behavioural biases.

Research limitations/implications

The study focused on rational decision making, self-attribution and overconfidence biases using primary data. Further studies can be encouraged to test the existence of behavioural biases based on both market level and individual account data simultaneously.

Practical implications

Insights from the study suggest that the investors should perform a post-analysis of each investment, so that they become aware of past behavioural mistakes and stop continuing the same. This might help investors to minimise the negative impact of self-attribution and overconfidence on their expected utility.

Originality/value

To the best of the authors’ knowledge, this is the first study to examine the relationship among investors’ rationality, self-attribution and overconfidence in the Indian context using a comprehensive survey.

Details

Review of Behavioral Finance, vol. 11 no. 2
Type: Research Article
ISSN: 1940-5979

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Article
Publication date: 10 June 2019

Hossein G.T. Olya, Pourya Bagheri and Mustafa Tümer

This study aims to present a unique perspective on the application of the theory of planned behaviour (TPB) in the context of the green lodging industry via…

Abstract

Purpose

This study aims to present a unique perspective on the application of the theory of planned behaviour (TPB) in the context of the green lodging industry via configurational modelling of three TPB dimensions in formulating hotel visitors’ behavioural responses. Attitude towards behaviour, subjective norms and perceived behavioural control are the three indicators of TPB used to predict guests’ continued intention to use and recommend green hotels on Cyprus, a Mediterranean island with a fragile ecological system.

Design/methodology/approach

A questionnaire-based survey is used to evaluate the study’s objectives. A total of 320 guests of green hotels were approached between June and July 2017 and invited to participate. Among them, 260 valid cases were obtained and used for data analysis. The structural model was tested using structural equation modelling (SEM), the configurational model was assessed using the fuzzy-set qualitative comparative analysis (fsQCA) and the necessary predictor was evaluated using the necessary condition analysis (NCA).

Findings

The SEM results revealed that attitudes regarding behaviour increased the continued intention to visit and recommend green hotels. Similarly, subjective norms enhanced the guests’ desired behavioural responses. Perceived behavioural control boosted their continued intention to visit, but this was insufficient for predicting green hotel guests’ intention to recommend. The fsQCA results indicated that two causal models explained the conditions of both high and low levels of behavioural responses. The NCA results showed that attitude towards behaviour was the only necessary condition of the two expected behavioural responses.

Originality/value

Several previous studies have tried to modify, decompose or merge the TPB to provide theoretical support for proposed conceptual models indicating visitors’ behaviours. Beyond such attempts, pragmatic analytical approaches (e.g. set-theoretic method) should be applied to present a comprehensive perspective on the association of TPB indicators in decoding the complexity of customers’ behaviours. To the best of the authors’ knowledge, this study is among the first in hospitality research to use three TPB indicators and three analytical approaches to extend the knowledge of guests’ behaviours related to green hotels.

Details

International Journal of Contemporary Hospitality Management, vol. 31 no. 6
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 1 May 2003

Craig L. Pearce, Henry P. Sims, Jonathan F. Cox, Gail Ball, Eugene Schnell, Ken A. Smith and Linda Trevino

Extends the transactional‐transformational model of leadership by deductively developing four theoretical behavioral types of leadership based on a historical analysis of…

Abstract

Extends the transactional‐transformational model of leadership by deductively developing four theoretical behavioral types of leadership based on a historical analysis of leadership literature. Then, in an exploratory empirical phase, uses two data sets to inductively develop alternative models of leadership types. Finally, with a third data set, tests several theoretically plausible typologies using second‐order confirmatory factor analysis (CFA). The results of the CFA generally support the existence of four leadership types: directive leadership, transactional leadership, transformational leadership, and empowering leadership.

Details

Journal of Management Development, vol. 22 no. 4
Type: Research Article
ISSN: 0262-1711

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Article
Publication date: 13 November 2019

Federico Barnabè and Pål I Davidsen

This study aims to contribute to the ongoing debate on behavioral operational research (BOR), specifically discussing the potential of system dynamics (SD) models to…

Abstract

Purpose

This study aims to contribute to the ongoing debate on behavioral operational research (BOR), specifically discussing the potential of system dynamics (SD) models to analyze decision-making heuristics. In more detail, the study suggests using an SD model as an ex-post research tool adopted not only to mimic a role-playing game (RPG) – reproducing the whole physical structure, and the complete set of decision rules specified for a supply chain (SC) management game – but also, and specifically, to replicate and analyze the players’ in-game behavior and decision-making.

Design/methodology/approach

After presenting a brief literature review devoted to highlighting the key concepts of the emerging streams of research named BOR and behavioral system dynamics (BehSD), the study presents the characteristics and results of an SC management-based RPG and describes the SD model that was developed to mimic the game and provide the base-run. A triangulation of data sources (which included feedback questionnaires and reports drawn up by 86 participants, as well as notes collected through direct observation of one of the authors) was used to infer information about and in-game decisions. Subsequently, four alternative versions of the SD model were calibrated to reproduce, investigate and explain ex-post the players’ in-game behavior and decision-making heuristics; this study specifically refers to one of them.

Findings

The SD model can be considered as the first output of this research. The model was calibrated to mimic the game and subsequently used to develop a few alternative models, helpful to replicate players’ behavior and analyze decision-making heuristics. The findings reveal not fully rational decisions taken by the players and share common findings with previous literature on the emergence of sub-optimal strategies (e.g. phantom ordering and hoarding strategies). The data collected from questionnaires, reports and direct observation additionally revealed that stress and behavioral factors played a role in affecting in-game decision-making.

Practical implications

Considering a specific RPG setting, the SD model developed in this study replicated and captured the range of factors affecting decision-making heuristics, allowing an ex-post analysis of in-game decisions. Notably, the research design presented and used in this study can be considered a generic one, which could be applied subsequently in a variety of contexts, also in combination with simulation/gaming tools and techniques different from role-playing, and both for educational and training purposes, and for research validation.

Originality/value

This study builds on and makes a contribution to the debate related to the emerging stream of research of BOR and more specifically, provides insights and evidence for the yet growing field of BehSD, at the same time advocating and suggesting further research in this area. Overall, the research revealed that behavioral factors may play a relevant role in driving and affecting human decision-making in simulation/gaming contexts.

Details

Journal of Modelling in Management, vol. 15 no. 1
Type: Research Article
ISSN: 1746-5664

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Article
Publication date: 3 November 2014

Manfredi Bruccoleri, Salvatore Cannella and Giulia La Porta

– The purpose of this paper is to explore the effect of inventory record inaccuracy due to behavioral aspects of workers on the order and inventory variance amplification.

Abstract

Purpose

The purpose of this paper is to explore the effect of inventory record inaccuracy due to behavioral aspects of workers on the order and inventory variance amplification.

Design/methodology/approach

The authors adopt a continuous-time analytical approach to describe the effect of inbound throughput on the inventory and order variance amplification due to the workload pressure and arousal of workers. The model is numerically solved through simulation and results are analyzed with statistical general linear model.

Findings

Inventory management policies that usually dampen variance amplification are not effective when inaccuracy is generated due to workers’ behavioral aspects. Specifically, the psychological sensitivity and stability of workers to deal with a given range of operational conditions have a combined and multiplying effect over the amplification of order and inventory variance generated by her/his errors.

Research limitations/implications

The main limitation of the research is that the authors model workers’ behavior by inheriting a well-known theory from psychology that assumes a U-shaped relationship between stress and errors. The authors do not validate this relationship in the specific context of inventory operations.

Practical implications

The paper gives suggestions for managers who are responsible for designing order and inventory policies on how to take into account workers’ behavioral reaction to work pressure.

Originality/value

The logistics management literature does not lack of research works on behavioral decision-making causes of order and inventory variance amplification. Contrarily, this paper investigates a new kind of behavioral issue, namely, the impact of psycho-behavioral aspects of workers on variance amplification.

Details

International Journal of Physical Distribution & Logistics Management, vol. 44 no. 10
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 3 August 2015

Mika Immonen and Sanna Sintonen

As the information society further develops, electronic services are created and physical distribution networks become sparse, it is important to analyse the determinants…

Abstract

Purpose

As the information society further develops, electronic services are created and physical distribution networks become sparse, it is important to analyse the determinants that inhibit or facilitate the ability to use these services. By focusing on the perceived behavioural control of computers, the purpose of this paper is to analyse how perceived physical restrictions, computer anxiety and ease of use influence the perceptions of control.

Design/methodology/approach

The authors examined older consumers (aged 60-79) in two cross-sectional studies conducted through mail surveys in 2004 and 2012. Randomized samples (n=1,000 in 2004 and n=3,000 in 2012) were drawn from the Finnish Population Register. The empirical research utilized structural equation modelling through multi-group analysis to explore the differences in the interrelationships between physical restrictions, computer anxiety, perceived ease of use and perceived behavioural control.

Findings

The results indicate that perceived behavioural control is directly influenced by ease of use and indirectly influenced by physical restrictions and computer anxiety. The eight-year time gap moderated only the relationship between physical restrictions and ease of use. Development seems to have been favourable, and device-related restrictions do not decrease ease of use as much as previously reported.

Originality/value

The present study starts a new discussion on how time moderates the relationship of technology perceptions in behavioural models that have been used to predict behavioural intent.

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Article
Publication date: 21 October 2019

Last Mazambani and Emmanuel Mutambara

Financial technology innovation within the developed world is driving financial markets, yet its adoption is lagging among consumers in emerging markets. At the same time…

Abstract

Purpose

Financial technology innovation within the developed world is driving financial markets, yet its adoption is lagging among consumers in emerging markets. At the same time, most African economies continue to be at the tail end of global financial innovations adoption. Given lagging consumer adoption of cryptocurrency in South Africa, the purpose of this paper is to apply the theory of planned behaviour (TPB) to predict behavioural intention to adopt cryptocurrency.

Design/methodology/approach

A survey instrument based on the TPB was used to collect quantitative data for predicting adoption from adult distance students at the Mancosa, Cape Town campus. For data analysis, the two-step structural equation modelling approach was used.

Findings

The findings indicate that attitude and perceived behavioural control positively impact the intention to adopt cryptocurrency. Subjective norm showed a negative non-significant influence. Overall, the results of the study show that the model has a good model fit and can be used to explain the theory.

Research limitations/implications

The results of this study may not be generalisable to the wider population as it is only based on a cross-sectional study of a sample of adult students at a single institute in South Africa.

Originality/value

The contribution of this paper is threefold: it is one of a few studies on the behavioural intention to adopt cryptocurrency in South Africa using the TPB model, it contributes towards the use of predictive behavioural economics models in understanding consumer behaviour critical to accelerating the adoption of financial innovations, and the results of the study also inform behaviour change strategies that can be applied by practitioners or policymakers to improve adoption. Studies of this nature may lead to the development of financial innovation in emerging markets through a nuanced understanding of consumer behaviour.

Details

African Journal of Economic and Management Studies, vol. 11 no. 1
Type: Research Article
ISSN: 2040-0705

Keywords

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