Risk aversion and schooling decisions

Using unique Italian panel data in which individual differences in attitudes toward risk are measurable (from a lottery pricing question), we investigate the effect of the individual specific time invariant risk aversion factor on the probability of entering higher education. Apart from the risk aversion factor, absolute risk aversion depends on various state variables (wealth, liquidity constraints, back- ground risk) and is assumed to be measured with nonclassical error. We also take into account the endogeneity of the response to the risk aversion question, as well as potential non-classical measurement error in wealth. All model specifications point out to the fact that individual specific risk aversion acts as a deterrent to higher education investment.Risk Aversion, Ex-ante risk, schooling, subjective beliefs, dynamic discrete choices

Risk aversion and schooling decisions

Using unique Italian panel data in which individual differences in attitudes toward risk are measurable (from a lottery pricing question), we investigate the effect of the individual specific time invariant risk aversion factor on the probability of entering higher education. Apart from the risk aversion factor, absolute risk aversion depends on various state variables (wealth, liquidity constraints, back- ground risk) and is assumed to be measured with nonclassical error. We also take into account the endogeneity of the response to the risk aversion question, as well as potential non-classical measurement error in wealth. All model specifications point out to the fact that individual specific risk aversion acts as a deterrent to higher education investment

Risk Attitudes and Measures of Value for Risky Lotteries.

The topic of this thesis is decision-making under risk. I focus my analysis on expected utility theory by von Neumann and Morgenstern. I am especially interested in modeling risk attitudes represented by Bernoulli utility functions that belong to the following classes: Constant Absolute Risk Aversion, Decreasing Absolute Risk Aversion (understood as strictly decreasing) and in particular a subset thereof - Constant Relative Risk Aversion. I build a theory of buying and selling price for a lottery, the concepts defined by Raiffa, since such theory proves useful in analyzing a number of interesting issues pertaining to risk attitudes' characteristics within expected utility model. In particular, I analyze the following: - Chapter 2 - expected utility without consequentialism, buying/selling price gap, preference reversal, Rabin paradox - Chapter 3 - characterization results for CARA, DARA, CRRA, simple strategies and an extension of Pratt result on comparative risk aversion - Chapter 4 - riskiness measure and its intuition, extended riskiness measure and its existence, uniqueness and propertiesdecision-making under risk; lottery; gamble; expected utility theory; risk attitudes; CARA; DARA; CRRA; buying and selling price for a lottery; D81; D03; C91;Decision making; Strategic planning; Risk-taking (Psychology);

Communicating about the risks and benefits of genetically modified foods. Effects of different information strategies

The research reported here aimed to investigate the effects of different types of information about genetically modified foods on both consumer attitudes towards genetic modification and their tendency to choose genetically modified products (compared to more traditionally manufactured alternatives). The impact of information strategy (balanced, or product specific), attributed information source (The “European Association of Consumers”, the “European Association of Industry” or the “European Commission”) and type of product (yoghurt or beer) were systematically examined in the four European countries involved in the research. The effects of a classical advertising approach were also examined in Denmark and Germany. The results indicated that • Providing information does not increase acceptance of genetically modified foods. The reverse was found to be true. • In all countries, consumers tended to select non-genetically modified products. Cross-national differences related to type of product were not very pronounced. • Those respondents who had positive prior attitudes towards genetically modified foods were more likely to select genetically modified foods. These attitudes were not influenced by information provision. • The form of information strategy about genetically modified foods was not important. However, the provision of information (in itself) was more likely to activate existing attitudes already held by respondents than change these attitudes. • Labelling of genetically modified products alone was unlikely to result in attitude activation. • These results are likely to be applicable only in cultures in which attitudes towards genetically modified foods are already well established. Information may have a different impact in countries in which the public have not been exposed to information about genetically modified foods. • Information source characteristics do influence consumer choices regarding genetically modified foods. In particular, consumers are more likely to choose genetically modified products if the source providing information about them is perceived to be honest, and the information is product specific, or if the source is perceived to be dishonest, and the information is balanced and general in content. • Industry was perceived to be more dishonest providers of information about genetically modified foods in Denmark, Italy and the United Kingdom, but not in Germany, where industry was as trusted as the other sources. • Increased transparency might improve public trust in industry. However, the public are more likely to believe the European Commission or consumer organisations when communicating about genetic modification.Consumer behaviour; Food; Denmark; Italy; United Kingdom; Germany

Determinants of the intention to use performance-enhancing substances among Portuguese gym users

The present study examined the determinants of the intentions to use prohibited performance- enhancing substances (PES) and the hypothesis of gender and PES use influencing Theory of Planned Behavior (TPB) variables. A TPB approach was used. A convenience sample of Portuguese gym users (n = 453) completed an anonymous web-based survey. Variance-based structural equation modeling, multigroup analysis strategy, latent mean analysis approach and one-way ANOVA analysis were used. The findings showed that, at structural level, results support the TPB framework in terms of characterizing and predicting intentions to PES use in the gym users sample, and that subjective norms were the strongest predictor of PES use intentions. Female and male differed in intentions to use PES, subjective norms and beliefs. However, the predictive model in study remains invariable in both groups. Concerning PES use, results showed the existence of a significant difference, regarding all the TPB´s constructs of the PES users and nonusers’ groups, and that the predictive capacity of each predictor was different for each group. Psychological strategies should be based on subjective norms, alongside beliefs and attitudes towards PES use, since these variables influence the intention to use PES in that particular population

Self-Employment and Risk Preference

We explore the relationship between self-employment and attitudes towards financial risk using individual level data drawn from the U.S. Survey of Consumer Finances (SCF) and the U.S. Panel Study of Income Dynamics (PSID). Both surveys include questions, which enable us to construct measures of an individual´s willingness to take risk allowing us to explore the implications of interpersonal differences in risk preference for the probability and success of self-employment. Our empirical findings suggest that willingness to take financial risk is positively associated with both the incidence and success of self-employment. We find that this relationship is particularly pronounced in cases where the individual actually started the business. Finally, we exploit the panel aspect of the PSID and find evidence consistent with a causal relationship between attitudes towards risk and self-employment with attitudes towards risk measured over 1969-1972 (i.e. prior to becoming self-employed) having a statistically significant positive influence on the probability of self-employment in 1996

Traveller Behaviour: Decision making in an unpredictable world

This paper discusses the nature and consequences of uncertainty in transport systems. Drawing on work from a number of fields, it addresses travellers’ abilities to predict variable phenomena, their perception of uncertainty, their attitude to risk and the various strategies they might adopt in response to uncertainty. It is argued that despite the increased interest in the representation of uncertainty in transport systems, most models treat uncertainty as a purely statistical issue and ignore the psychological aspects of response to uncertainty. The principle theories and models currently used to predict travellers’ response to uncertainty are presented and number of alternative modelling approaches are outlined. It is argued that the current generation of predictive models do not provide an adequate basis for forecasting response to changes in the degree of uncertainty or for predicting the likely effect of providing additional information. A number of alternative modelling approaches are identified to deal with travellers’ acquisition of information, the definition of their choice set and their choice between the available options. The use of heuristic approaches is recommended as an alternative to more conventional probabilistic methods

The Relationship Between Risk Attitudes and Heuristics in Search Tasks: A Laboratory Experiment

Experimental studies of search behavior suggest that individuals stop searching earlier than predicted by the optimal, risk-neutral stopping rule. Such behavior could be generated by two different classes of decision rules: rules that are optimal conditional on utility functions departing from risk neutrality, or heuristics derived from limited cognitive processing capacities and satisfycing. To discriminate among these two possibilities, we conduct an experiment that consists of a standard search task as well as a lottery task designed to elicit utility functions. We find that search heuristics are not related to measures of risk aversion, but to measures of loss aversion