Behavioral finance: comparison of the level of financial risk aversion among healthcare professionals

Behavioral Finance is considered the new era of finance. Supported by its assumptions, this work aimed to detect and compare the levels of risk aversion in financial decisions of two groups of health professionals: one composed of those exposed to emergency situations (front line in the care of Covid-19 patients) and the other composed of those who work in non-urgent conventional hospital situations. With the application of a questionnaire to professionals from both groups, responses were obtained that made it possible to test the hypothesis that work in emergency situations generates a different influence on the feeling of risk aversion than conventional non-urgent hospital work. The results of the statistical analysis and the chi-square test revealed that there is a small difference in risk aversion between professionals in both groups, without showing, however, statistical significance. The results also revealed evidence that professionals who act/acted on the frontline against Covid19, in situations of gain, accepted to take greater risks, aiming at greater financial reward. The results also revealed evidence that professionals who act/acted on the frontline against Covid19, in situations of gain, accepted to take greater risks, aiming at greater financial reward. In situations involving losses, these same professionals were more risk averse than those in the other group.

A Literature Review Assessing the Most Common Attributes Used in Stated-Preference Studies Assessing Influenza Vaccination: Do We Know What Health Care Professionals Value?

Objectives: Several attributes may be important in flu vaccine and since Covid-19, the role of health care professionals (HCPs) may have become more important in increasing flu vaccine uptake. We conducted a literature review to assess if previous preference research could inform future flu vaccination policies. Method(s): We conducted a literature review to assess the most common attributes used in stated-preference studies to determine seasonal flu vaccination preferences. PubMed with key terms such as "discrete choice", "stated preference" and "flu/vaccin*" was used to retrieve relevant research. Result(s): In total, twelve studies investigating consumer and HCP preferences for flu vaccines using a discrete-choice experiment were included. Six studies were conducted in vaccine-eligible populations, three were conducted with parents (specifically, two focused on older adults and one elicited preferences directly from HCPs in Hong Kong). Three studies were conducted in the Netherlands, two in Japan and four in China. Vaccine efficacy was most often framed in terms of percentage (n=7). Out of pocket cost and duration of immunity were common attributes. Source of recommendation for vaccination (i.e., regulatory or public health body) was assessed in 25% of the studies. In studies assessing parental preferences for their children influenza vaccination, risks of fewer side effects were, unsurprisingly, preferred. Finally, among HCPs, vaccine effectiveness and vaccination location (staff clinic/mobile vaccination center) were most important and could increase the probability of vaccination. Conclusion(s): Information incompleteness and asymmetry could play a role in vaccine hesitation and/or aversion. To increase vaccination rates, evidence on the attributes perceived to be important to both HCPs and the general population may help the design and delivery of vaccines that match consumers' preferences. Currently, there is a critical need for more stated-preference studies among HCPs to better understand the attributes likely to increase vaccination rates against seasonal influenza.Copyright © 2023

Covid-19 outbreak, ambiguity aversion, and macroeconomic expectations

How will the outbreak of Covid-19 affect people's expectations on the macroeconomy? We conduct an online experiment in China to investigate the relationship between ambiguity aversion, risk aversion, and expectations about the macroeconomy after the onset of Covid-19 which can be considered an uncertainty shock. Our study differs from previous studies as we elicit the individuals' preferences in terms of ambiguity aversion and risk aversion, and test how these preferences drive macroeconomic expectations. We find that ambiguity averse subjects are more pessimistic about the effect of Covid-19 on the economic growth rate. Ambiguity averse subjects are more likely to reduce consumption and expect lower savings in response to the outbreak. More risk taking subjects have more optimistic expectations on the macroeconomy, and they are less likely to reduce consumption, investment, and savings.

Examining restaurant purchase intention during crises: The role of message appeal

Purpose: This paper aims to examine the joint role of the pandemic-induced source of crisis (i.e. health and social crisis) based on Maslow's Hierarchy of Needs and message appeal in customer perception of and behavioral intention toward a restaurant. Design/methodology/approach: This study uses a 2 (source of crisis: social, health) x 2 (message appeal: social, health) between-subjects factorial design. A total of 181 samples was collected and data was analyzed by using ANCOVA and PROCESS. Findings: The results showed a significant two-way interaction between source of crisis and message appeal on to-go intention. With the potential effect of risk aversion being controlled, message appeal significantly impacted perceived competence, which influenced both dine-in and to-go intentions. Practical implications: The research findings suggest a crucial role of perceived fit between message appeal and customer concerns during crises. Therefore, restaurant managers should actively communicate their safety practices with their customers to inspire customer confidence. Originality/value: This study identifies crisis dimensions based on human needs during crises such as the COVID-19 pandemic, which determines the persuasiveness of marketing messages. (PsycInfo Database Record (c) 2023 APA, all rights reserved)

Mental health of Japanese firefighters administering emergency medical treatments during COVID-19

This is the first study investigating the determinants of mental health among Japanese firefighters with the COVID-19 outbreak. Firefighters who respond to emergency calls and administer emergency medical treatment face numerous serious threats to their mental health because of the spread of COVID-19. These threats range from significant infection risks to changes in daily operations. We conducted an online questionnaire survey with Japanese firefighters (n = 2,748, valid responses = 2,204) who also served as ambulance workers during the second COVID-19 wave in August 2020. The questionnaires inquired about personal and occupational demographics, occupational stress resulting from COVID-19, social support, germ aversion using a subscale of tire Perceived Vulnerability to Disease (PVD) scale, and the General Health Questionnaire (GHQ-12). The results indicated that the burdens of infection prevention, anxiety about infection and furloughs, interpersonal conflicts related to COVID-19, reduced social support, and germ aversion were associated with deterioration of mental health. Measures for maintaining the mental health of firefighters are discussed based on these results. (PsycInfo Database Record (c) 2023 APA, all rights reserved)

Risk-Averse Ride-Hailing Platform Operations With Safety Risk-Averse Consumers Under Pandemics: Roles of Blockchain Technology and Government Sponsors

Today, ride-hailing platform operations are popular. Facing pandemics (e.g., COVID-19) some customers feel unsafe for the ride-hailing service and possess a "safety risk-averse" (SRA) attitude. The proportion of this type of SRA customers is unfortunately unknown, which makes it difficult for the ride-hailing platform to decide its optimal service price. In this article, understanding that blockchain technology (BT) based systems can help improve market estimation for the proportion of SRA customers, we conduct a theoretical study to explore the impacts that the BT-based system can bring to the platform, customers, and drivers. We consider the case in which the platform is risk-averse (in profit) and serves a market with both SRA and non-SRA customers. We analytically prove that using BT, the optimal service price will be increased and BT is especially helpful for the case with a more risk-averse ride-hailing platform. However, whether it is more or less significant for the more risk-averse SRA customers depends on their degree of risk aversion. We uncover that when the use of BT is beneficial to the customers, it will also be beneficial to the drivers, and vice versa. We derive in closed-form the analytical conditions under which the use of BT can be beneficial to the ride-hailing platform, customers, and drivers (i.e., achieving "all-win"). When all-win cannot be achieved automatically, we explore how governments can provide sponsors to help. We further extend the analysis to consider the general case in which BT incurs both a fixed cost as well as a cost increasing in demand. We prove that the main conclusion remains robust. In addition, we reveal that the required amount of government sponsor to achieve all-win is the same between the two different costing models explored in this article.

Cash holdings, ambiguity aversion, and investment puzzles

We consider a real options model with ambiguity to investigate how cash holdings and ambiguity aversion affect a firm's dynamic investments. First, we prove a unique positive ambiguity coefficient exists when ambiguity exceeds it such that entrepreneurs believe the project is "too valueless to invest in”. Second, the coupons demanded by creditors increase with ambiguity, and cash holdings reduce the ambiguity premium. Our research provides a new explanation as to why companies abandon investment and hold more cash under the influence of the COVID-19 pandemic.

Preference Shifts During Health Shocks: Foreign Tourists' Expenditure-Price Elasticity Throughout the Pandemic

This study evaluates the changes in the expenditure-price elasticities of foreign tourists in the summer periods of 2019, 2020, and 2021. We first develop a theoretical characterization that combines microeconomic, loss aversion, price inequality and precautionary savings theories. Next, exploiting microdata for more than 34,000 foreign tourists visiting Spain, we estimate OLS and quantile regressions to empirically examine the expenditure elasticities with respect to the prices of transport services, leisure activities and bars and restaurants at the destination (17 regions). We find that (i) the expenditure-price elasticity of transportation (leisure activities) increases (decreases) during the pandemic, whereas that of bars and restaurants remains unchanged, (ii) foreign tourists are comparatively less expenditure-price elastic at high expenditure levels in transportation and bars and restaurants, and (iii) expenditure-price elasticities are highly heterogeneous depending on the origin country. Managerial and theoretical implications of the findings for firms' pricing strategies are discussed.

The influence of social anxiety, trait anxiety, and perceived vulnerability to disease on the frequency of face mask wearing

The purpose of this study was to examine the psychological factors related to the frequency of face mask wearing (mask wearing) among Japanese people. Specifically, the influence of social anxiety (scrutiny fears, social interaction anxiety), trait anxiety, and perceived vulnerability to disease (germ aversion, perceived infectability) on mask wearing frequency was examined. We also investigated whether the relationships were altered based on the COVID-19 pandemic and the seasons. Online surveys (N=6,742) were conducted in the summer and winter sea sons from Aug. 2018 to Dec. 2020. Results showed that scrutiny fears, perceived infectability (but only in the winter season), and germ aversion affected the frequency of mask wearing before the COVID-19 pandemic. However, the relationships were altered as the COVID-19 pandemic spread. Scrutiny fears and perceived infectability did not play a role in the frequency of mask wearing. These alternations of results could be derived from the increase in mask wearing rate, changes in the reasons to wear masks among Japanese people, and elevation of perceived risk to COVID-19 due to the increased transmission. (PsycInfo Database Record (c) 2023 APA, all rights reserved)

Pro-social preferences and risk aversion with different payment methods: Evidence from the laboratory

With the advance of smart devices and financial technologies in place, economic transactions involving mobile payments are becoming increasingly preferred. The COVID-19 pandemic has further promoted the adoption of mobile payment since it is faster and more hygienic than cash payment. However, empirical evidence is scarce on whether people would react differently when the transaction is made through mobile or cash payment. In this paper, we examine whether the payment method has an impact on prosocial decisions and risk attitudes using standard laboratory games such as the dictator game, the ultimatum game as well as the conventional Holt and Laury (2002) risk assessment. After controlling a rich set of demographic characteristics, including age and gender, we find subjects are more generous when they use mobile payment compared to cash, but the payment effect on risk attitude is not evident.

Schadenfreude, politics, and social media. Malicious joy towards politicians during the pandemic

This work investigates Schadenfreude, the malicious joy for the misfortunes of others. This under-investigated emotion expresses a refusal to empathize with the misfortunes of others, to the point of enjoying them. Recent classification models identify three types of Schadenfreude: for Aversion, if the pleasure is due to pure antipathy towards the victim;for Injustice, if you think that the misfortune suffered by the Victims punishes them for wrongs caused in the past;and for Image, when the misfortune of others makes those who feel Schadenfreude have a better consideration of themselves or of someone or something in which they believe. The Covid-19 pandemic unleashed in 2020 is a misfortune that has aroused malicious joy in some people. The research presented here analyses 1940 expressions of Schadenfreude collected on Facebook and Twitter in 26 Italian newspapers, referred to two political leaders, an Italian and a British one, when they contracted Covid: Nicola Zingaretti, one of the leaders of the government coalition in Italy, and Boris Johnson, Prime Minister of the United Kingdom. The research distinguishes cases of Schadenfreude for Aversion and Injustice towards them and singles out thirteen ways of expressing them: insults, derisions, irony, curses, negative wishes, expressions of pleasure, displeasure for a misfortune not serious enough, refusal to empathize, clarification of the wrong perpetrated or of the causes of aversion;and also, appeals to the divine, and direct references to justice and one's aversion. The distribution of the expressions in the two types makes it possible to distinguish different motivations and levels of intensity of the Schadenfreude felt towards the two victims, differentiating the functions both of the emotion itself and of its manifestation. (PsycInfo Database Record (c) 2023 APA, all rights reserved)

Risk aversion and COVID-19 vaccine hesitancy.

We here investigate the role of risk aversion in COVID-19 vaccine hesitancy. The theoretical effect is ambiguous, as both COVID-19 infection and vaccination side-effects involve probabilistic elements. In large-scale data covering five European countries, we find that vaccine hesitancy falls with risk aversion, so that COVID-19 infection is perceived as involving greater risk than is vaccination.

The relationship between the psychological distress derived from COVID-19 and the loss aversion is modulated by the alexithymia trait

studies on stress and decision-making usually address acute and artificial stressors. However, COVID-19 outbreak set the perfect scena-rio to address how decision-making, and specifically loss aversion, could be affected by a real and persistent stressor, able to promote a significant psychological distress. In parallel, alexithymia has been identified as a potential moderator of the loss aversion expression, since it could impair the incorporation of emotional information when making a decision, leading to "cold" decisions. Through a within-subjects design (N = 70), our aim was to study the relationship between the psychological distress caused by the pandemic context and the loss aversion changes, considering alexithymia as a moderating factor. Our results show a significant increment in both psychological distress and loss aversion, merely one month after the confinement's onset. Moreover, both variables were positively associated only when alexithymia was low, i.e., the alexithymia buffered the effect of psychological distress on decision-making: a higher alexithymia implied a lower loss aversion increase.

The macroeconomic effects of uncertainty and risk aversion shocks

This paper identifies two types of volatility shocks, namely quantity and price of risk shocks, which can intuitively be interpreted as uncertainty and risk aversion shocks, respectively. Identification is achieved in a shock-restricted SVAR framework using a combination of narrative and external variable restrictions. We find that uncertainty shocks have large negative effects on output, while risk aversion shocks are particularly damaging to asset prices and are deflationary. We also quantify to which extent the endogenous response of risk aversion can exacerbate the effects of uncertainty shocks, thereby providing an estimate of the quantitative relevance of the risk-premium channel of uncertainty shocks. A historical contribution exercise suggests that the GFC is best characterised by a combination of uncertainty and risk aversion shocks, while uncertainty shocks were more important than risk aversion shocks during the COVID pandemic. © 2023 The Author

The interconnectedness across risk appetite of distinct investor types in Borsa Istanbul

PurposeThis study aims to investigate the interconnectedness across the risk appetite of distinct investor types in Borsa Istanbul. This study also examines the causal impact of global implied volatility indices on the risk appetite of these investor groups.Design/methodology/approachThe authors use a novel time-varying frequency connectedness framework of Chatziantoniou et al. and a new time-varying Granger causality test with a recursive evolving procedure by Shi et al. over June 2008 and July 2022.FindingsThe results show a high level of interconnectedness across the risk appetite of different investor types. The sizable spillovers to domestic types of investors either occur from professional or foreign investors, indicating the long-term dominant effect of foreign and more qualified investors on the domestic investors in Borsa Istanbul. The authors provide significant evidence of causality from the global implied volatility to the Borsa Istanbul risk appetite indices, which are getting stronger after the COVID-19 outbreak.Originality/valueUnlike the previous studies, the authors analyze the risk appetite sub-indices of various types of investors to reveal behavioral distinctions and interconnectedness across them. The authors use a novel econometric framework to assess investors' risk appetite in different investment horizons in a time-varying system. Together with volatility index (VIX), the authors also use volatilities of oil (OVX), gold (GVZ) and currency (EVZ), considering the information transmission not only from stock markets but also energy, metals and currency markets. The present data set covers significant financial crises, socioeconomic events and the COVID-19 outbreak.

A resilient inventory management of pharmaceutical supply chains under demand disruption

Inspired by the global supply chain disruptions caused by the COVID-19 pandemic, we study optimal procurement and inventory decisions for a pharmaceutical supply chain over a finite planning horizon. To model disruption, we assume that the demand for medical drugs is uncertain and shows spatiotemporal variability. To address demand uncertainty, we propose a two-stage optimization framework, where in the first stage, the total cost of pre-positioning drugs at distribution centers and its associated risk is minimized, while the second stage minimizes the cost of recourse decisions (e.g., reallocation, inventory management). To allow for different risk preferences, we propose to capture the risk of demand uncertainty through the expectation and worst-case measures, leading to two different models, namely (risk-neutral) stochastic programming and (risk-averse) robust optimization. We consider a finite number of scenarios to represent the demand uncertainty, and to solve the resulting models efficiently, we propose L-shaped decomposition-based algorithms. Through extensive numerical experiments, we illustrate the impact of various parameters, such as travel time, product's shelf life, and waste due to transportation and storage, on the supply chain resiliency and cost, under optimal risk-neutral and risk-averse policies. These insights can assist decision makers in making informed choices. © 2023 Elsevier Ltd

Robust risk choice under high-water mark contract

By assuming that a risk-neutral hedge fund manager has ambiguous beliefs about the return process of risky asset, we study his robust risk choice under the high-water mark. The results show that without management fees, ambiguity aversion induces the manager to take more risk as the fund is close to the termination but take less risk as the fund approaches the high-water mark. With management fees, ambiguity aversion increases the induced risk aversion and moderates the manager's incentive to take risk, predicting that it is the manager with higher rates of management fees that reduces the risky asset holdings more when he becomes less confident and/or more pessimistic about the future returns. The model implies that managers' ambiguity aversion is a possible factor explaining hedge fund activities in stock markets during the financial crisis of 2007–2009 and in US Treasury markets during COVID-19 crisis. Finally, taxation is taken into account. © 2023, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.

What is an Optimal Allocation in Hong Kong Stock, Real Estate, and Money Markets: An Individual Asset, Efficient Frontier Portfolios, or a Naïve Portfolio? Is This a New Financial Anomaly?

To test for arbitrage opportunities and market efficiency in the Hong Kong money, stock, and real estate markets, we find that the money market stochastically dominates both the stock and real estate markets. Furthermore, the real estate market dominates the stock market, the money market dominates nearly all the efficient frontier portfolios, none of the efficient portfolios dominates the money market, and the money market also dominates the equal-weighting portfolio. This infers that in some cases investors could achieve higher expected ex-ante utility by investing in an individual asset rather than a portfolio. Our conclusions drawn from the pre-COVID-19 period are the same as those drawn from the entire period and the conclusions drawn from the COVID-19 period are the same as those drawn from the entire period except that the money market only stochastically dominates some of the efficient frontier portfolios. Our findings question diversification benefits in the Hong Kong capital market during our sample period, including both the pre-COVID-19 and COVID-19 periods.

Aversion amplification in the emerging COVID-19 pandemic: The impact of political trust and subjective uncertainty on perceived threat

Health psychology shows that responses to risk and threat depend on perceptions as much as objective factors. The present study focuses on the precursors of perceived threat of COVID-19. We draw on political and social psychology and use the aversion amplification hypothesis to propose that subjective uncertainty and political trust should interactively impact perceived threat. We conducted a cross-sectional survey amongst the general population of Scotland (N = 188) in the early period of the COVID-19 pandemic in the UK. We hypothesised that high political trust should ameliorate the threat-elevating impact of uncertainty, thereby reducing the perceived threat from a high to moderate level. This hypothesis was supported, even after accounting for demographic differences. The discussion addresses the implications of the interactive role of trust and uncertainty for strategies to manage public behaviour as the pandemic progresses. (PsycInfo Database Record (c) 2023 APA, all rights reserved)

Disposition Effect: Brazilian Investors' Behavior during the Covid-19 Pandemic

This study investigates the disposition effect with regard to Brazilian investors, with focus on the year 2020. The database is composed by more than 12,000 trades by 274 investors. We follow the method of Odean (1998) to estimate the proportions of gains and losses realized and test the null hypothesis of equality of these proportions in each portfolio. The results suggest that Brazilian investors behave in line with the disposition effect. They sell winning stocks too early and hold losing stocks too long. A stock that is gaining value is more likely to be sold from day to day compared to a stock that is losing value. The disposition effect was not found in March, which suggests that investors employed a loss-limit during periods of market stress, no matter if the stock went up or down. © 2023 FUCAPE Business School. All rights reserved.