With workplace disasters in developing countries increasingly in the news, a major question is how to encourage consumers to use corporate social responsibility as a criterion in purchasing. Distinct from environmental concerns, social responsibility is defined here with respect to the humanitarian aspects of corporate practice, including fair wages and working conditions, equitable treatment of the disadvantaged, and restriction of child labor. Although the idea of socially responsible consumption (SRC) was first identified over forty years ago, most recent research on changing consumption habits focuses specifically on environmentally responsible consumption (ERC). Combining the psychological concept of social norms with economic emphasis on choice framing, research in behavioral economics has suggested that ERC can be promoted by “nudges,” low-cost initiatives that alter the decision environment to favor specific options. Here, we provide an overview of the existing literature on nudges and consumer choice, including the role of social norms, as well as other factors involved in successful social messaging. Previous research on ERC suggests that social norm nudges may result in higher rates of energy conservation, recycling and reuse, and purchasing of ecologically-friendly products. Applying these findings to the domain of SRC, we propose a set of possible interventions to increase consumer attention to social responsibility, highlighting the distinguishing roles of empathy and targeted demographic appeals in nudging consumers towards social change.

Previous literature has produced mixed findings of a tendency of investors, coined the “ostrich effect” to display a preference for avoiding potentially painful information regarding their portfolios. This paper investigates the presence of the ostrich effect during the 2008/2009 financial crisis via a survey of investors who held portfolios before and through that period. The results demonstrate that most investors do not report any ostrich effect. However, approximately one fourth of investors demonstrated a preference for delaying learning about potentially negative portfolio information, but ultimately chose to learn the information. These findings provide a more nuanced understanding of investors’ behaviors during financial crises and supports a more specific definition of the ostrich effect. Specifically, that some investors prefer a delay in painful information acquisition but do no indefinitely “keep their heads in the sand.”

The productivity of individuals can be altered by cognitive environmental factors such as those that induce psychological pressure. The goal of this analysis is to determine the extent to which a selection of variables influences an individual’s perception of pressure and its subsequent effect on productivity. To do so, the performance of golfers under pressure on the PGA TOUR was proxied using the scrambling percentage statistic. Two regressions, one using data from players who were cut at the end of the second round and the other using data from players who were not cut at the end of the second round, were used to study how golfers’ scrambling percentage for a given round was influenced by changes in experience, time, rank, tournament prestige, and their expected future performance. An increase in variables representing tournament prestige, tournament round number, and player position on the leader board lead to an increase in pressure which in turn leads to poorer subsequent performance. On the other hand, an increase in player experience and the knowledge that a player would be cut at the end of the second round tend to decrease pressure and increase player performance.

In this thesis, I will explore the idea that choices between present, smaller value options and future, larger value options depend on how much individuals trust the future to deliver the reward. Due to this aspect of trust, the individual must build their estimate of trust based on information for their present environment and their future expectations. This estimate of future trust can change across different time points in the same environment (i.e., before and after a national election) and between environments in the same time point (i.e., between two countries experiencing different economic rates of change). In this set of presented experiments, I will explore the link between decision environment and delay discounting, as well as the relationship between the contents of future perception and delay discounting. These two experiments will test differences in delay discounting (a) across two economic systems (China and the U.S.), as well as (b) before and after a national election (2018 U.S. Midterms). The results of the different decision environments study show that the delay discounting rates are significantly different across the two countries, specifically within the framing of present and future. These differences are not explained by differences in culture effects or individual differences in personality traits, suggesting that difference in environment is driving the effect. The results from the Midterm election experiments show evidence for differences in delay discounting between political identities and income groups. There are also differences in how these two groups perceive the contents of their future before and after the election. Specifically with evidence that negative future projection corresponds with increased delay discounting. Overall, these experiments show that delay discounting can be affected by the way information is framed within an environment and how we expect our environments to change over time.

<p>In recent years, considerable effort has been directed toward establishing the nature of the investment behaviour of life insurance companies. In this dissertation an extended portfolio analysis model was developed for the simultaneous determination of the efficient composition of insurance and investment activities of a life insurance company. This was done within a model that takes advantage of the existing finance foundations and the concepts and techniques of modern demand system analysis.</p> <p>Unlike current models which used quadratic programming techniques and are interested in the construction of efficient sets, we have used a utility maximization approach. A two parameter portfolio model was constructed utilizing elements of utility theory and of the theory of insurance. The model provided us with the proportion of assets held in the balance sheet as well as which liabilities are used to raise the necessary capital.</p> <p>The model developed has sufficient empirical content to yield hypotheses' about life insurance portfolio behaviour and thus was tested using appropriate econometric techniques. A comparative static analysis yielded elasticities of substitution between financial assets and liabilities. The estimation of these elasticities in the context of a flexible functional form model, forms a central part of this dissertation. More specifically, by utilizing a mean-variance portfolio framework and a general Box-Cox utility function we were able to model the demand for assets and liabilities by an insurance company. On empirical grounds we found that, in general, the square root quadratic utility function best fits the data. We also tried to evaluate the square root quadratic approximation by showing that, broadly speaking, it yields signs for elasticities of substitution which are consistent with the theory.</p> <p>A by-product of the model developed is the ability to compare stock and mutual life insurance companies. The common belief that mutual companies follow a riskier path in the way they conduct their business was supported by the results in this study.</p> <p>The results obtained from the study are of significant importance since life insurance companies have substantial obligations to millions of households in the economy. Furthermore, despite the extraordinary decline in the importance of the life insurance industry in the bond and mortgage markets during the sixties and the seventies, the industry is still a major supplier of funds to those markets.</p> / Doctor of Philosophy (PhD)

This study investigated the effects of unit price structure, unit price descriptions, and unit price sequence on the demand for money in humans. Six groups of 3 participants solved multiplication problems in exchange for money under various unit prices. Consumption of money decreased as the unit price increased across all conditions. However, the data also showed that: (a) fixed price structures produced slightly more elastic demand than did variable price structures, (b) price descriptions produced more elastic demand under variable price structures but had little or no effect under fixed price structures, and (c) the alternate sequence used with fixed price structures produced slightly more elastic demand.

Three groups of participants were exposed to different unit price sequences. Unit prices for all groups ranged from unit price 1 to 21. Analyses of demand curves, response rates, session duration, and elasticity coefficients suggest that the sequence of exposure to unit prices can affect the elasticity of demand. In addition, the size of unit price contrast, direction of unit price change, and proximity to experimental milestones also may affect the consumption of monetary reinforcers.

Mutual funds and money managers have recently come under fire for their inability to beat market level returns since the Great Recession. With the recent trend towards passive money management through ETFs and other market-based securities, many investors have come to doubt whether above market returns are realizable in today’s economic climate. This paper examines whether business news has any predictable impact on stock price. Specifically, the paper explores the impact of analyst reports, mergers & acquisition news, legal affairs, insider buying and selling and changes to executive leadership on a stock’s excess returns. The results show that optimistic analyst ratings are correlated with positive excess returns before, during, and after the ratings are released. Furthermore, pessimistic analyst ratings are correlated with negative excess returns over the same time frame. These results provide support for a short term trading strategy that mirrors analyst opinions.

This dissertation addresses the effect of information on firm and individual behavior. The first chapter examines the design of an optimal feedback mechanism by an informed principal and uses the results to explain why firms tend to assign coarse subjective ratings to their employees. When a firm has private information about an employee's ability, it can communicate this information through a subjective evaluation mechanism. I characterize the firm's optimal disclosure policy as a function of the worker's ability distribution and provide an algorithm to compute it. Further, I show that with some reasonable restrictions on the ability distribution, the firm's optimal strategy is always to reward the best workers, fire the worst ones, and assign one central rating to the rest. The second chapter investigates an informed principal's optimal feedback strategy in a dynamic setting. I first consider the case where both parties have non-binding outside options. In this case, if the principal ever wants to reveal any information, she will do so at the earliest possible stage. Moreover, the optimal disclosure policy can be characterized in the same way as in the static case. The same conclusion holds for the case where both parties have binding and constant outside options. I also discuss the case where both parties have binding and time-variant outside options. After incorporating firms' need to promote and/or to retain workers, the model is used to explain wage dynamics. The third chapter models a decision maker who "rationally" distorts his own belief to avoid the feeling of regret. People often suffer from regret when they realize that their previous choices were suboptimal. As a result, in a dynamic setting where information is revealed gradually, people are tempted to deny new negative information in order to avoid regret. At the same time, they are also aware of the economic cost of such belief distortions. A "rational" decision maker will optimally trade off these two concerns and choose his own belief accordingly. This tradeoff makes the past affect current decisions and hence can explain the sunk cost fallacy.

Understanding the etiological and maintaining processes of problematic drinking continues to be a challenge. There has been a growing amount of research focusing on the decisional processes that act to maintain addictive behaviors. Elucidating this underlying process is key to understanding the range of drinking behavior observed among individuals. Rather than relying on one theory, examining overlap between multiple theories of alcohol use may lead to a better understanding of such a process. Using a construct validation approach, this study utilized motivational (Ambivalence Model of Craving), cognitive (Alcohol Outcome Expectancy Theory), and behavioral theories (Behavioral Economics) of alcohol use to examine the extent to which they tap into a common underlying decisional process of alcohol use behaviors. Two methods were used including establishing motivational profiles using latent profile analysis and an experimental manipulation of situational context to examine the effect of setting on constructs of interest. Results from the two studies provided partial support for the overlap between these theories as it pertains to a common underlying process.