Risk Aversion

This paper focuses on the effects of nonbinding recommendations on bargaining outcomes. Recommendations are theorized to have two effects: they can create a focal point for final bargaining positions, and they can decrease outcome uncertainty should dispute persist. While the focal point effect may help lower dispute rates, the uncertainty reduction effect is predicted to do the opposite for risk-averse bargainers. Which of these effects dominates is of critical importance in the optimal design of alternative dispute resolution (ADR) procedures, which are becoming increasingly utilized to help resolve disputes in a variety of settings. We theoretically examine the effects of recommendations on the bargaining contract zone. Our theoretical framework, which allows bargainers ’ final positions to influence a binding outcome should negotiations fail, provides for a more stringent test of focal points than previously considered. We also present data from controlled laboratory bargaining ...

We survey over 100 financial planners to assess their reasoning mode, intertemporal choices, risk aversion and preferences, and framing focus. Using the Cognitive Reflection Test, we find that financial planners are more analytical than the general population. ...

This paper considers whether countries might mutually agree a policy of open borders, allowing free movement of workers across countries. For the countries to agree, the short run costs must outweighed by the long term benefits that result from better labor market flexibility and income smoothing. We show that such policies are less likely to be adopted when workers are less risk averse workers and when countries trade more. More surprisingly, we find that some congestion costs can help. This reverses the conventional wisdom that congestion costs tend to inhibit free migration policies.

This comparison of Israeli kibbutz members to city residents examines how of individualistic/collective society affects financial decision making. Findings revealed that kibbutz members are more risk averse and discount the future more than city residents, undermining the assumption that collective society accords a safety net. We claim that the collective financial management of the kibbutz reduces individuals’ financial knowledge and

We systematically explore decision situations in which a decision maker bears responsibility for somebody else's outcomes as well as for her own in situations of payoff equality. In the gain domain we confirm the intuition that being responsible for somebody else's payoffs increases risk aversion. This is however not attributable to a 'cautious shift' as often thought. Indeed, looking at risk attitudes in the loss domain, we find an increase in risk seeking under responsibility. This raises issues about the nature of various decision biases under risk, and to what extent changed behavior under responsibility may depend on a social norm of caution in situations of responsibility versus naive corrections from perceived biases. To further explore this issue, we designed a second experiment to explore risk-taking behavior for gain prospects offering very small or very large probabilities of winning. For large probabilities, we find increased risk aversion, thus confi...

The research reported in this article examines the influences of the organizational context of the franchisor on the entrepreneurial strategies of franchisors, their innovation efforts, and franchisor support of entrepreneurial activities by franchisees. Specifically, this study examines how ...

This paper presents the results of a dichotomous choice contingent valuation (CV) study of flood control policy in Bangladesh. The application of CV studies in the domain of flood exposure and flood control, where people are asked to trade-off money income in terms of willingness to pay (WTP), the risk of flooding and corresponding impacts on their life and livelihood, is rare. The use of CV in developing countries furthermore faces the challenge of significant income constraints, limiting the applicability of the method. ...

and building materials exporters better understand the unique market segments A mail survey of Japanese post and beam builders was conducted to measure their that exist within Japan,s residential post level of ethnocentrism, market orientation, risk aversion, and price consciousness. The and beam constmction market, identify data were analyzed utilizing factor and cluster analysis. The results showed that Japa- where

The mission of the International Journal of Risk and Contingency Management (IJRCM) is to discover what risk and uncertainty mean to different disciplines and industries. Risks are known in the sense they can be measured but it is the underlying uncertainty that remains elusive. Risk is present across industries and sectors (private, public, and non-profit). As a result, organizations and government around the world are currently experiencing higher levels of risk. At the other end of the spectrum from risk, contingency is the buffer against expected risk and uncertainty.  The journal provides an interdisciplinary approach to risk and contingency management, encouraging researchers and practitioners to provide best practices and a look into the future of this field.

I have the impression that many of the elements that are supposed to provide access to music actually impoverish our relationship with it.Michel Foucault, “Contemporary Music and the Public”As a theory discourse, audience development offers suggestions about changes to arts organizations, such as the orchestra concert. At the same time, these proposals are rather ambiguous about the underlying aesthetical ideals.

We examine if a gender gap persists in executive compensation and if the composition and the determinants of executive compensation for men versus women are the same for the S&P1500 listed firms during the period from 1992 to 2004. This analysis is also extended to high tech firms, where high scholarship is required both for male and female executives. The results reveal that the gender gap in executive compensation is reducing essentially after the year 2000. Also, the factors that explain the variation in executive compensation are not all the same for men and women. However, firms continue to pay women, who are considered more risk averse than men, a similar proportion of risky compensation components, such as stock options and restricted stocks, than they pay to men. In terms of technology firms, we find that the gender differences in total compensation are not statistically significant. Our study offers insight into recent data for executive compensation. The finding that the gender gap diminishes is a sign of a better functioning market for executives. Our findings could be potentially useful for compensation committees in order to develop compensation packages that take into consideration the degree of risk aversion in order to enhance performance. Compensation adjusted for risk aversion can produce a higher level of satisfaction for the employees and can lead to better performances. Future research should focus on international comparison of various dimensions of executive compensation.

This paper investigates theoretical and empirical links between jobtenure and short-term mobility wage gains. Standard theoretical approaches examining this subject (search theory, job-matching and on-the-job training models) predict a negative correlation between these variables. Furthermore, this result has been confirmed in different applied researches for US. However, European labour market institutions appear to be quite different from US ones, especially for employment protection and turnover costs. Taking this feature into account we develop a theoretical model, evaluated through analytical and simulation procedures, where optimal switching conditions determine a positive correlation between jobtenure and short-term mobility wage gains. The main proposition derived from our model is confirmed for the Italian case. Using a panel database and different econometric specifications -in order to control for individual observable and non-observable effects, firm attributes and endog...