Description and experience: How experimental investors learn about booms and busts affects their financial risk taking.

A few years ago, the world experienced the most severe economic crisis since the Great Depression. According to the depression baby hypothesis, people who live through such macroeconomic shocks take less financial risk in their future lives (e.g., lower stock market participation). This hypothesis has previously been tested against survey data. Here, we tested it in a simulated experimental stock market (based on the Spanish stock index, IBEX-35), varying both the length of historical data available to participants (including or excluding a macroeconomic shock) and the mode of learning about macroeconomic events (through sequential experience or symbolic descriptions). Investors who learned about the market from personal experience took less financial risk than did those who learned from graphs, thus echoing the description-experience gap observed in risky choice. In a second experiment, we reversed the market, turning the crisis into a boom. The description-experience gap persisted, with investors who experienced the boom taking more risk than those who did not. The results of a third experiment suggest that the observed gap is not driven by a wealth effect, and modeling suggests that the description-experience gap is explained by the fact that participants who learn from experience are more risk averse after a negative shock. Our findings highlight the crucial role of the mode of learning for financial risk taking and, by extension, in the legally required provision of financial advice

The role of information search and its influence on risk preferences

According to the ‘Description–Experience gap’ (DE gap), when people are provided with the descriptions of risky prospects they make choices as if they overweight the probability of rare events; but when making decisions from experience after exploring the prospects’ properties, they behave as if they underweight such probability. This study revisits this discrepancy while focusing on information-search in decisions from experience. We report findings from a lab-experiment with three treatments: a standard version of decisions from description and two versions of decisions from experience: with and without a ‘history table’ recording previously sampled events. We find that people sample more from lotteries with rarer events. The history table proved influential; in its absence search is more responsive to cues such as a lottery’s variance while in its presence the cue that stands out is the table’s maximum capacity. Our analysis of risky choices captures a significant DE gap which is mitigated by the presence of the history table. We elicit probability weighting functions at the individual level and report that subjects overweight rare events in experience but less so than in description. Finally, we report a measure that allows us to compare the type of DE gap found in studies using choice patterns with that inferred through valuation and find that the phenomenon is similar but not identical across the two methods

BMW – Mastering the Crises with “New Efficiency?”

Purpose Make a contribution on company business models and typical reactions to economic crises. Design/methodology/approach Media-analysis-based case study. Findings Crisis is handled through drawing on a strategy deriving from the typical features of the company; through the crisis these features are even intensified. Research limitations/implications Multinational companies are complex and only transparent to a small degree; the empirical data therefore rests on a database with articles. Social implications Social implications can be seen at the BMW as a functioning example for social partnership as a form of economic embeddedness at the societal level

Rabin's Paradox for Health Outcomes

Many health economic studies assume expected utility maximisation, with typically a concave utility function to capture risk aversion. Given these assumptions, Rabin's paradox (RP) involves preferences over mixed gambles yielding moderate outcomes, where turning down such gambles imply absurd levels of risk aversion. Although RP is considered a classic critique of expected utility, no paper has as of yet fully tested its preferences within individuals. In an experiment we report a direct test of RP in the health domain, which was previously only considered in the economic literature, showing it may have pervasive implications here too. Our paper supports the shift towards alternat

A probabilistic analysis of argument cogency

This paper offers a probabilistic treatment of the conditions for argument cogency as endorsed in informal logic: acceptability, relevance, and sufficiency. Treating a natural language argument as a reason-claim-complex, our analysis identifies content features of defeasible argument on which the RSA conditions depend, namely: change in the commitment to the reason, the reason’s sensitivity and selectivity to the claim, one’s prior commitment to the claim, and the contextually determined thresholds of acceptability for reasons and for claims. Results contrast with, and may indeed serve to correct, the informal understanding and applications of the RSA criteria concerning their conceptual dependence, their function as update-thresholds, and their status as obligatory rather than permissive norms, but also show how these formal and informal normative approachs can in fact align

A role for core planar polarity proteins in cell contact-mediated orientation of planar cell division across the mammalian embryonic skin

Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/. © The Author(s) 2017. Supplementary information accompanies this paper at doi:10.1038/s41598-017-01971-2.The question of how cell division orientation is determined is fundamentally important for understanding tissue and organ shape in both healthy or disease conditions. Here we provide evidence for cell contact-dependent orientation of planar cell division in the mammalian embryonic skin. We propose a model where the core planar polarity proteins Celsr1 and Frizzled-6 (Fz6) communicate the long axis orientation of interphase basal cells to neighbouring basal mitoses so that they align their horizontal division plane along the same axis. The underlying mechanism requires a direct, cell surface, planar polarised cue, which we posit depends upon variant post-translational forms of Celsr1 protein coupled to Fz6. Our hypothesis has parallels with contact-mediated division orientation in early C. elegans embryos suggesting functional conservation between the adhesion-GPCRs Celsr1 and Latrophilin-1. We propose that linking planar cell division plane with interphase neighbour long axis geometry reinforces axial bias in skin spreading around the mouse embryo body.Peer reviewe

A habituation account of change detection in same/different judgments

We investigated the basis of change detection in a short-term priming task. In two experiments, participants were asked to indicate whether or not a target word was the same as a previously presented cue. Data from an experiment measuring magnetoencephalography failed to find different patterns for “same” and “different” responses, consistent with the claim that both arise from a common neural source, with response magnitude defining the difference between immediate novelty versus familiarity. In a behavioral experiment, we tested and confirmed the predictions of a habituation account of these judgments by comparing conditions in which the target, the cue, or neither was primed by its presentation in the previous trial. As predicted, cue-primed trials had faster response times, and target-primed trials had slower response times relative to the neither-primed baseline. These results were obtained irrespective of response repetition and stimulus–response contingencies. The behavioral and brain activity data support the view that detection of change drives performance in these tasks and that the underlying mechanism is neuronal habituation