We investigate the trade-off between the opportunity costs of decisions and their quality in a simple model. In a lab experiment, we introduce exogenous variation in the opportunity costs of time. Contrary to claims in the previous literature, we show that using more time when making small-stake...

This paper investigates the dynamics of group decisions regarding risky tax avoidance strategies using a laboratory experiment. To identify the causes of risk taking by groups, we compare individual to group decisions in three scenarios. The first scenario allocates payoffs from group decisions...

According to the Description-Experience gap (DE gap), people act as if overweighting rare events when information about those events is derived from descriptions but as if underweighting rare events when they experience them through a sampling process. While the is now clear evidence that the DE...

In der gesetzlichen und der betrieblichen Altersversorgung existieren unterschiedlichen Finanzierungssysteme: Die Leistungen der gesetzlichen Rentenversicherung werden im Umlageverfahren primär von den heute in das System einzahlenden Erwerbstätigen finanziert. Dieses Umlageverfahren im...

Two new reports from the team behind the annual Global Risks Report identify the headline risks, challenges and, encouragingly, the opportunities the world is facing as a result of the COVID-19 pandemic, with the aim of raising awareness, fostering widespread debate and enabling better...

We report on a laboratory experiment testing for the presence of loss aversion, as separate from risk aversion, utilizing an asset integration protocol designed to ensure that a loss of cash provided by the experimenter is viewed as a real loss by experimental participants. Our experimental...

This study contributes to the public debate on gender quotas and the literature on gender and risk taking by analysing how the level of risk taking within a group is influenced by its gender composition. In particular we look at the shift of risk taking between group and individual decisions and...

This paper presents four incentivised experiments analysing jointly the separate role of immediate integral emotions and knowledge in individual decision making under ambiguity. Reactions to a natural source of uncertainty (i.e., forthcoming real-world election results) were measured using both...

We test the effects of dual processing differences in both individual traits and decision states on risk taking. In an experiment with a large representative sample (N = 1,832), we vary whether risky choices are induced to be based on either emotion or reason, while simultaneously measuring...

We study three fundamental components of financial agency settings: Perception and communication of investment profiles, the interaction of agents’ and clients’ preferences, and the role of (non-)monetary incentives. The perception of investment profile terminology is very heterogeneous,...

With the rise of experimental research in the social sciences, numerous methods to elicit and classify people's risk attitudes in the laboratory have evolved. However, evidence suggests that people's attitudes towards risk may change considerably when measured with different methods. Based on a...

We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of...

Purpose - The purpose of this paper is to test the relationship between the annual income earned by the investors and eight behavioural biases exhibited by the investors such as mental accounting, anchoring, gambler's fallacy, availability, loss aversion, regret aversion, representativeness and...

The St. Petersburg paradox is one of the oldest challenges of expected value theory. Thus far, explanations of the paradox aim at small probabilities being perceived as zero and the boundedness of utility of the outcome. This paper provides experimental results showing that neither diminishing...

Many countries around the world are making substantial and increasing public investments in children by providing resources for schooling from early years through to adolescence. Recent research has looked at how parents respond to children's schooling opportunities, highlighting that public...

Vaccination against infectious disease may be beneficial to reduce illness in vaccinated persons and disease transmission across the population. The welfare-economic practice of specifying a social welfare function and considering a planner who seeks to optimize welfare provides a constructive...

In absence of insurance contracts to share risk, public information is a double-edged sword. On the one hand, it empowers self-insurance as agents better react to shocks, reducing risk. On the other hand, it weakens market-insurance as common knowledge of shocks restricts trading risk. We embody...

We study how investors' preferences for robustness influence corporate investment, financing, and compensation decisions and valuation in a financial contracting model with agency. We characterize the robust contract and show that early liquidation can be optimal when investors are sufficiently...

We investigate the trade-off between the opportunity costs of decisions and their quality in a simple model. In a lab experiment, we introduce exogenous variation in the opportunity costs of time. Contrary to claims in the previous literature, we show that using more time when making small-stake...

Market integration is seen as a complementary measure to decarbonize energy markets. In the context of power markets, this translates into regions that coordinate to maximize welfare in the power market with respect to a climate target. Yet, the maximization of overall welfare through...

This paper provides experimental evidence of the role of higher order risk attitudes - especially prudence - in prevention behavior. Prudence, under an expected utility framework, increases (decreases) self-protection effort compared to the risk neutral level when the risk of losing part of an...

We show that the disposition to focus on favorable or unfavorable outcomes of risky situations affects willingness to take risk as measured by the general risk question. We demonstrate that this disposition, which we call risk conception, is strongly associated with optimism, a stable facet of...

"Will it help me sell more shoes?" - This response by the owner of a shoe factory when asked by a leader in Information Technology about acquiring a new IT device touches upon one of the most important points about IT and companies: should an organization invest in IT? If your answer is "yes",...

The present study reviews the literature about dynamic decision-making and judgment of low-probability, high-consequence events. The specific features of this situation under risk and uncertainty imply an anomaly: while the single probability of an event with high negative consequences may be...