Search results

Current research in the field of behavioural finance has attempted to discover behavioural biases and their characteristics in individual investors’ irrational decision-making. This study aims to find out how biases in information based on knowledge affect decisions about investments.

In step one, through existing research and consultation with specialists, 13 relevant items covering major aspects of bias were determined. In the second step, multiple linear regression and artificial neural network were used to analyse the data of 337 retail investors.

The investment choice was heavily impacted by regret aversion, followed by loss aversion, overconfidence and the Barnum effect. It was observed that the Barnum effect has a statistically significant negative link with investing choices. The research also found that investors’ fear of making mistakes and their tendency to be too sure of themselves were the most significant factors in their decisions about where to put their money.

This research contributes to the expansion of the knowledge base in behavioural finance theory by highlighting the significance of cognitive psychological traits in how leading investors end up making irrational decisions. Portfolio managers, financial institutions and investors in developing markets may all significantly benefit from the information offered.

This research is a one-of-a-kind study, as it analyses the emotional biases along with the cognitive biases of investor decision-making. Investor decisions generally consider the shadowy side of knowledge management.

Determining the impact of behavioral influences on the stock market has significant implications for investment analysis and portfolio management. Behavioral biases are parameters that need to be considered in investment decision-making. The purpose of this study is to inform Bangladeshi investors about behavioral biases that they may encounter when making investment decisions in the prevailing frontier environment.

Through the chi-square test, one-way ANOVA, paired-samples t-test and descriptive analysis based on the facts collected from 281 respondents of the Dhaka Stock Exchange (DSE), the study has found that individual investors of Bangladesh often make investment decisions emotionally rather than based on theories.

The result shows that risk aversion and risk perception are the two most influential emotional dimensions that impact investors' decisions. The findings are consistent with the other researchers and highlight the fact that investors hardly act according to the norms recommended in the financial theories.

The findings are grounded on a small portion of investors at DSE on some particular days, which is not sufficient to study individual investors' entire complex decision-making behavior from various angles. Many respondents were reluctant and even confused to disclose their behavioral aspects. These, along with biased and careless answers, may impede the identification of the actual scenario of the behavioral responses in decision-making that demand further study.

The novelty of this study is unique in that it examined investors of the DSE, who are considered to be a representative in a frontier market like Bangladesh. Since this market is not very resilient, small investors need to be aware of the biases of behavioral factors to survive.

Research in the domain of behavioral finance has proven that investors demonstrate irrational behavior while making investment decisions. In a similar domain, the primary objective of this research is to prioritize the behavioral biases that influence cryptocurrency investors' investment decisions in the Indian context.

A fuzzy analytic hierarchy process (F-AHP) was used to prioritize the behavioral factors impacting cryptocurrency investors' investment decisions. Overconfidence and optimism, anchoring, representativeness, information availability, herding, regret aversion, and loss aversion are among the primary biases evaluated in the present study.

The findings suggested that the two most important influential criteria were herding and regret aversion, with loss aversion and information availability being the least influential criteria. Opinions of family, friends, and colleagues about investment in cryptocurrency, the sale of cryptocurrencies that have increased in value, the avoidance of selling currencies that have decreased in value, the agony of holding losing cryptocurrencies for too long rather than selling winning cryptocurrencies too soon, and the purchase of cryptocurrencies that have fallen significantly from their all-time high are the most important sub-criteria.

This survey only covered active cryptocurrency participants. Additionally, the study was limited to individual crypto investors in one country, India, with a sample size of 467 participants. Although the sample size is appropriate, a larger sample size might reflect the more realistic scenario of the Indian crypto market.

The study is relevant to individual and institutional cryptocurrency investors, crypto portfolio managers, policymakers, researchers, market regulators, and society at large.

To the best of the authors' knowledge, no prior research has attempted to explain how the overall importance of various criteria and sub-criteria related to behavioral factors that influence the decision-making process of crypto retail investors can be assessed and how the priority of focus can be established, particularly in the Indian context.

The study aims to test prospect theory (PT) predictions in the cryptocurrency (CC) market. It proposes a new asset pricing model that explores the potential of prospect theory value (PTV) as a significant predictor of CC returns.

The study comprehensively analyses a large sample set of 1,629 CCs, representing more than 95% of the CC market. The study uses a portfolio analysis approach, employing univariate and bivariate sorting techniques with equal-weighted and value-weighted portfolios. The study also employs ordinary least squares (OLS) regression, panel data methods and quantile regression (QR) to estimate the models.

This study demonstrates an average inverse relationship between PTV and CC returns. However, this relationship exhibits asymmetry across different quantiles, indicating that investor reactions vary based on market conditions. Moreover, PTV provides more robust predictions for smaller CCs characterized by high volatility and illiquidity. Notably, the findings highlight the dominant role of the probability weighting (PW) component in PT for predicting CC behaviors, suggesting a preference for lottery-like characteristics among CC investors.

The study is one of the early studies on CC price dynamics from the PT perspective. The study is the first to apply a QR approach to analyze the cross-section of CCs using a PT-based asset pricing model. The results shed light on CC investors' decision-making processes and risk perception, offering valuable insights to regulators, policymakers and market participants. From a practical perspective, a trading strategy centered around the PTV effect can be implemented.

This paper examines the relationship between behavioral biases, and demand decisions for life insurance products in Uganda.

Data were collected from 351 life insurance policyholders in Uganda. The authors used a cross-sectional survey by applying a structured questionnaire. Descriptive analysis was conducted and hypothesized relationships between the constructs were evaluated through the use of structural equation modeling.

Results indicate that, behavioral biases are significant predictors of life insurance demand among Ugandan policyholders. Also, the two behavioral bias variables (heuristic bias and prospect bias) are significant predictors of demand decisions for life insurance products.

These results are helpful for both insurers and regulators. For insurers, it is now evident that demand decisions for life insurance products are not fully rational. It is imperative for insurers to simplify life insurance product information (heuristics), integrate product education and widen dissemination of product information (prospect bias) to allow policyholders to come up with optimal demand decisions. While for insurance policymakers, the study provides an understanding of behavioral biases. With such insights, policymakers can identify exploitative and deceptive information that target policyholders to better guide life insurance documentation and product designs.

This study is the first to offer insights into behavioral biases' influence on demand decisions for life insurance products in a developing country like Uganda. By integrating prospects and expected utility theory, this study examines rationality and irrationality in demand decisions for life insurance products.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-03-2023-0201

The promotion of autonomous vehicles introduces privacy and security risks, underscoring the pressing need for responsible innovation implementation. To more effectively address the societal risks posed by autonomous vehicles, considering collaborative engagement of key stakeholders is essential. This study aims to provide insights into the governance of potential privacy and security issues in the innovation of autonomous driving technology by analyzing the micro-level decision-making processes of various stakeholders.

For this study, the authors use a nuanced approach, integrating key stakeholder theory, perceived value theory and prospect theory. The study constructs a model based on evolutionary game for the privacy and security governance mechanism of autonomous vehicles, involving enterprises, governments and consumers.

The governance of privacy and security in autonomous driving technology is influenced by key stakeholders’ decision-making behaviors and pivotal factors such as perceived value factors. The study finds that the governmental is influenced to a lesser extent by the decisions of other stakeholders, and factors such as risk preference coefficient, which contribute to perceived value, have a more significant influence than appearance factors like participation costs.

This study lacks an investigation into the risk sensitivity of various stakeholders in different scenarios.

The study delineates the roles and behaviors of key stakeholders and contributes valuable insights toward addressing pertinent risk concerns within the governance of autonomous vehicles. Through the study, the practical application of Responsible Innovation theory has been enriched, addressing the shortcomings in the analysis of micro-level processes within the framework of evolutionary game.

The purpose of this paper is to examine the influences of positive-framed and negative-framed green advertising on pro-environmental WTP. This study also explores the impacts of regulatory focus, environmental concern and pleasant level on green advertising effectiveness.

Data are collected from a within-participant between-group online experiment in China. The generalized estimating equation (GEE) is employed to investigate the impact of green advertising on WTP. Grouped regression and mediation analyses are conducted to explore the influences of regulatory focus, environmental concern and pleasure on advertising efficacy.

The experimental outcomes indicate that green advertising significantly increases participants’ pro-environmental WTP, and negative-framed advertising is more effective than its positive-framed counterpart. Prevention focus heightens receptivity to green advertising, and the relation of environmental concern to advertising effectiveness is inverted U-shaped. Pleasure mediates the effect of green advertising on the WTP, and this mediating role is influenced by emotional intensity when advertising is negatively framed.

Evidence suggests that green advertising may propel pro-environmental WTP by raising environmental awareness, but such a relationship remains severely understudied. As such, this study pioneers in exploring the impact of different-framed green advertising on pro-environmental WTP, extending the concept of green advertising to environmental management. By considering the influences of regulatory focus, environmental concern and pleasure, this study raises practical implications for designing green advertisements, such as increasing the usage of visual elements.

There is growing scholarly interest in the use of penalty in employment contracts which reduce employees' pay if the employee's performance does not meet a pre-specified performance threshold. Prior accounting research has focused exclusively on the effect of penalty on employee performance. In this study, the authors extend earlier research by examining how penalty affects the employers' wage offers. Prior research suggests that employers' generous wage offers in employment contracts are normally translated as trust by employees who in turn reciprocate with higher effort. The authors present a theory that predicts penalty reduces employers' wage offers. Then, the authors propose unrestricted communication between employers and employees as a potential moderator for the negative effect of penalty on trust and reciprocity.

The authors implement a controlled lab experiment with a 2 × 3 experimental design (Penalty: Present and Absent; and Communication: None, One-Way and Two-Way).

The authors develop their predictions by utilizing insights from motivational-crowding and organizational communication theories. The authors hypothesize and find evidence that employers' ability to penalize employees can reduce employers' motivation to offer generous wages. As a result, reduced trust demotivates employees to provide high effort. However, the authors find that a two-way communication moderates the negative effect of penalties by restoring trust, thereby, increasing reciprocity. Finally, the authors find evidence that relationship-oriented messages explain the moderating effect of communication.

This study is subject to limitations inherent in all experimental studies. The decisions in the study experiment are less complex than those found in practice. Moreover, there are significantly higher costs and potential benefits to shirk on effort in practice. The authors encourage future research on other organizational features that would influence the generalizability of their theory and results. Nonetheless, this study makes an important contribution to the literature on trust, reciprocity, gift-exchange contracts, managerial controls and communication.

This paper has several important implications for theory and practice. The authors show that the presence of penalty may not automatically result in increasing employees' effort level, contrary to traditional economic theory predictions. This effect is driven mainly by the crowding out effect of a penalty on employers' desire to signal trust. Therefore, the presence of an open communication channel may become an important tool to reverse the psychological effect of reduced trust when penalty is present. Therefore, the study's findings contribute to the trust–reciprocity literature on how management control system influences employers' and employees' behavior. These findings are especially germane given the trend in the workplace toward establishing open communication at different levels within the firm hierarchy. The study also contributes to the literature on trust–reciprocity as critical informal controls and social norms in accounting practices (Bicchieri, 2006; Stevens, 2019), shedding light on how firms may influence employees' reciprocity in management control practices and induce them to act in line with the firm's objectives by opening communication channels.

Prior accounting research document that penalty in employment contracts increases employee performance due to loss aversion. The study, however, demonstrates that the positive effect of penalty is not sustained in a gift-exchange contract. Specifically, the study's experimental results provide evidence that the availability of penalties can psychologically change the way employers perceive their decisions on offering generous wages (i.e. trust) and consequently reduce employees' reciprocation of high effort levels. Yet, the authors propose a two-way communication as a restorative mechanism for the lost trust. Implications for theory and practice are discussed.

Following behavioral finance and monetary wisdom, the authors theorize: Decision-makers (investors) adopt deep-rooted personal values (the love-of-money attitudes/avaricious financial aspirations) as a lens to frame critical concerns (short-term and long-term investment decisions) in the immediate-proximal (current income) and distal-omnibus (future inheritance) contexts to maximize expected utility and ultimate serenity across context, people and time.

The authors collected data from 277 active equity traders (professional money managers and individual investors) in Pakistan’s two most robust investment hubs—Karachi and Lahore. The authors measured their love-of-money attitude (avaricious monetary aspirations), short-term and long-term investment decisions and demographic variables and collected data during Pakistan's bear markets (Pakistan Stock Exchange, PSX-100).

Investors’ love of money relates to short-term and long-term decisions. However, these relationships are significant for money managers but non-significant for individual investors. Further, investors’ current income moderates this relationship for short-term investment decisions but not long-term decisions. The intensity of the aspirations-to-short-term investment relationship is much higher for investors with low-income levels than those with average and high-income levels. Future inheritance moderates the relationships between aspirations and short-term and long-term decisions. Regardless of their love-of-money orientations, investors with future inheritance have higher magnitudes of short-term and long-term investments than those without future inheritance. The intensity of the aspirations-to-investments relationship is more potent for investors without future inheritance than those with inheritance. Investors with low avaricious monetary aspirations and without inheritance expectations show the lowest short-term and long-term investment decisions. Investors' current income and future inheritance moderate the relationships between their love of money attitude and short-term and long-term decisions differently in Pakistan's bear markets.

The authors help investors make financial decisions and help financial institutions, asset management companies, brokerage houses and investment banks identify marketing strategies and investor segmentation and provide individualized services.

Professional money managers have a stronger short-term orientation than individual investors. Lack of wealth (current income and future inheritance) motivates greedy investors to take more risks and become more vulnerable than non-greedy ones—investors’ financial resources and wealth matter. The Matthew Effect in investment decisions exists in Pakistan’s emerging economy.

The paper aims to elucidate effective strategies for promoting the adoption of green technology innovation within the private sector, thereby enhancing the value of public–private partnership (PPP) projects during the operational phase.

Utilizing prospect theory, the paper considers the government and the public as external driving forces. It establishes a tripartite evolutionary game model composed of government regulators, the private sector and the public. The paper uses numerical simulations to explore the evolutionary stable equilibrium strategies and the determinants influencing each stakeholder.

The paper demonstrates that government intervention and public participation substantially promote green technology innovation within the private sector. Major influencing factors encompass the intensity of pollution taxation, governmental information disclosure and public attention. However, an optimal threshold exists for environmental publicity and innovation subsidies, as excessive levels might inhibit technological innovation. Furthermore, within government intervention strategies, compensating the public for their participation costs is essential to circumvent the public's “free-rider” tendencies and encourage active public collaboration in PPP project innovation.

By constructing a tripartite evolutionary game model, the paper comprehensively examines the roles of government intervention and public participation in promoting green technology innovation within the private sector, offering fresh perspectives and strategies for the operational phase of PPP projects.