This dissertation studies two interesting business cycle issues. The first issue concerns the effectiveness of tax policies in stimulating an economic recovery. The second issue concerns the costs of business cycle fluctuations to an investor who chooses to invest in risky assets. The first essay evaluates the effectiveness of the "end of double tax" policy in stimulating an economic recovery by analyzing the transitional dynamics of the economy's aggregates toward the steady states. The effectiveness of this policy is compared with two alternative policies that reduce corporate income or personal income taxes. Although all of these tax policies are found to stimulate the economy's levels of output and investment, the "end of double taxation" appears to exert the most significant impact on the aggregate levels of these variables in the short run. Based on this finding, we claim that the "end of double taxation" is an effective policy for stimulating an economic recovery in the short-run. In a thought-provoking exercise Lucas (1987 and 2003) argues that the welfare costs of business cycles is negligible. The second essay follows up on this argument by incorporating prospect theory into the formulation of individual preferences. Prospect theory proposes that agents care about changes in their wealth level rather than the level of their final wealth, and individuals are also taken to be more sensitive to losses than gains in their financial wealth. According to the prospect theory, therefore, the agents take fluctuations in the asset returns seriously. Results from empirical tests find that an individual investor, on average, would give up2.58-9.49% of the average returns, she receives from investing in the risky asset, in order to eliminate all the fluctuations associated with her asset returns. This result is interpreted as an indication of much larger welfare costs than Lucas' estimates.

This study models and examines how changes in marketing information affects the degree of investor¡¦s risk aversion, and in turn, influences investor¡¦s decision-makings process under uncertainty. Under the mixed assumptions, the theoretical evidence in this study indicates that cumulative prospect theory (CPT) investors have propensity to discipline their depreciated assets and to sell their appreciated assets. Further, I find that CPT investors have less incentive to sell their holdings with higher advertising than ones with lower advertising when facing a paper gain or a paper loss. The empirical evidence indicates that advertising can help funds stem cash outflows, and finds investors are less willing to sell high performing investments with high fund family advertising than investments with low fund family advertising, and are more reluctant to redeem losing mutual funds with high fund family advertising than funds with low fund family advertising. For loser funds, a possible explanation from this study is that advertising seems to re-enforce the efficacy of recent investor decisions and adjust their beliefs to confirm past decisions, thus lets investors have more incentive to continue holding losing funds. For winner funds, this study infers that advertising may signal product quality, increase consumer satisfaction, brand equity and consumer loyalty that lead investors satisfied with their past decisions to have a greater propensity to retain their winning investments.

In this study, an integrated solution methodology for a general discrete multi-criteria decision making problem is developed based on the well-known outranking method Promethee II. While the methodology handles the existence of interdependency between the criteria, it can also incorporate the prospect theory in order to correctly reflect the decision behavior of the decision maker. A software is also developed for the application of the methodology and some applications are performed and presented.

This dissertation is an analysis of how presidents make foreign policy decisions. Rather than explaining foreign policy decisions by focusing on individuals or institutions, I stress the role of political pressures and context faced by presidents. It shows that foreign policy decisions are not merely a reaction to stimulus from the international or domestic arenas but involve political considerations that affect policy choice. The dynamic elements in the argument are political resources and risk. The relationship between the risk propensity of the president and presidential political resources provides an important link to understanding foreign policy decisions. Within the realm of good public policy, a politically rational president can choose to act or respond to foreign policy disputes in various ways, including diplomacy, political coercion, economic coercion, covert action, or military intervention, based on his assessment of the political context and his willingness to accept the associated risks. The level of presidential political resources determines the risk propensity of the president. Presidential foreign policy decisions will vary depending on the quantity of available political resources. Thus, understanding the risk propensity of the president increases our ability to explain foreign policy decisions. The contribution of this research is the identification of a mechanism for understanding how the interaction between the domestic and international political environments, and individual decision-makers influence foreign policy decisions. My research bridges the gap between structural theories, “theories that make predictions about foreign policy outcomes without reference to the cognition and actions of the actors themselves,” and decision-making theories that stress the role of the actors (Ikenberry 2002, 5). Although the component parts of the foreign policy decisionmaking system are widely known, we lack theories that tie the pieces together.

The present study aimed to apply the framing effects in prospect theory to examine college students¡¦ risk tendencies under the context of educational marketing. Prospect theory proposes that framing effects result in a preference for risk-averse choices in gain situations and risk-seeking choices in loss situations. Frame in this research was treated as a between-subjects factor. Participants were randomly assigned to either the gain or loss condition with the counter-balanced method. The decision tasks consisted of four domains of marketing mix, i.e., product, price, place, and promotion. The results showed that participants¡¦ risk tendencies were in accordance with the predictions from the perspective of framing effects. Reference points were employed by participants to determine gain or loss framing. Specifically, risk-averse tendencies were more prominent in gain situations than those in loss situations, whereas risk-seeking tendencies were more pronounced in loss situations than those in gain situations. Hence, in order to produce desirable outcomes of marketing mix in educational marketing, marketers in higher education should take the influences of reference point and framing effects on decision-making into consideration.

The internationalization of SMEs has been recognized as one of the important paths to growth in SMEs. However, internationalization is also a resource and competence-demanding process. This is especially true for smaller-sized SMEs – the small and micro-sized firms – which have a large resource constraint, making internationalization even more challenging. Although this group of small firms counts for an average of over 98% of the total population of enterprises in EU countries, extant research on the internationalization of this group is still limited. Therefore, the main purpose of this dissertation is to contribute to a better understanding of evolving patterns of internationalization in the smaller-sized SMEs. The study uses emerging market entry along the internationalization of small firms as a context to probe the dynamics of perceived risk (uncertainty) and perceived opportunity in different foreign markets which influence the important decisions of small firms during their internationalization. The main study takes a longitudinal approach and uses mixed methods to investigate the features in both the initial period and the continued period of internationalization. It mainly builds on a multiple-case study of 12 Swedish firms, which have/had emerging market entry experience and/or involvement. This study illustrates influences from the environmental, organizational and individual levels on evolving patterns of internationalization in the investigated firms. This dissertation concludes that critical decisions and actions taken in the internationalization process depend on interactions among the influence and resources from the three levels. Such interactions form a conditional preference on perceived risk (uncertainty) and perceived opportunity during the internationalization of small firms. The study further proposes that the dynamics in the internationalization process are caused by a prospect-guided change mechanism. This dissertation contributes to the literature by: differentiating patterns of internationalization; enriching the study of “born global” in the continued period of internationalization; introducing a new perspective on the interpretation of dynamics in the internationalization; and increasing the understanding on the interactions of resources from three levels on the internationalization of small firms.

Interpersonal conflict, a process involving perceptions of differences and opposition, is often an undesired but inevitable consequence of interaction between individuals. Multiple goals (internal representations of desired states) can be present in interpersonal conflict. Past studies identify four major categories of conflict-related goals: content goals, relationship goals, identity goals, and process goals; the last three may be classified together as social goals. Several hypotheses were tested in an online experiment in which adult members of evangelical churches (N = 276) imagined themselves in various church-related conflict situations. Participants were assigned to one of two conditions; in one condition, participants read scenarios where their content goals were achieved and in the other condition, participants read scenarios where their content goals were not achieved. Each participant read a series of three scenarios involving the different types of social goals. For each of the three scenarios, they imagined how satisfied they would be with two different outcomes. In the first outcome, in addition to achieving or not achieving their content goal (depending on the condition), they did not achieve the social goal that was made salient (e.g., the relationship is damaged or they lose face); in the second outcome, they achieved this social goal. In addition, participants completed individual difference measures of dominance, sociability, face threat sensitivity, and justice sensitivity. This study found support for the hypothesis that the achievement of each type of conflict-related goal leads to greater satisfaction with the conflict outcome than not achieving the goal. It also found support for the hypothesis that the achievement of two conflict-related goals (specifically, a content goal and a social goal) interact to lead to greater satisfaction with the conflict outcome beyond the main effects of achieving each goal individually. Additionally, this study tested hypotheses that individual differences (dominance, sociability, face threat sensitivity, and justice sensitivity) moderate the relationship between conflict-related goal achievement and conflict outcome satisfaction. Support was only found for the hypothesis that individuals higher in sociability report greater differences in satisfaction when their relationship goals are achieved (relative to not achieved) than those who score lower in sociability. The results imply that, when both a content goal and a social goal are present, disputants are especially satisfied when both goals are achieved. Exploratory analyses also indicated females, younger adults, and people with greater church involvement responded more strongly to achieving goals than males, older adults, and those with less church involvement. This information can be used by disputants, negotiators, and mediators who are concerned about maximizing joint outcomes.

Made available in DSpace on 2014-06-11T19:24:16Z (GMT). No. of bitstreams: 0 Previous issue date: 2011-12-14Bitstream added on 2014-06-13T18:52:03Z : No. of bitstreams: 1 silvafilho_dm_me_arafcl.pdf: 714760 bytes, checksum: ea2cad49fd5cf43f5dd3ab6e40dfd07a (MD5) / As Finanças Comportamentais, com base em estudos empíricos, procuram demonstrar que os investidores nem sempre se mantêm racionais ao tomarem decisões que envolvem riscos, conforme argumentava a Teoria Neoclássica de Finanças. Este trabalho tem como objetivo contextualizar o recente campo de estudo e replicar a investigação empírica do artigo seminal de Kahneman e Tversky (1979) que aborda a Teoria do Prospecto e que constitui a base de Finanças Comportamentais. Simultaneamente, serão comparados os resultados da pesquisa com os de Kahneman e Tversky (1979) com os obtidos nesse estudo. Os resultados encontrados nesta população específica mostram similaridade, e que mesmo com populações e períodos diferentes, os indivíduos tendem a se comportar de maneira, na maioria das vezes, contraria ao que argumentava a Teoria Neoclássica de Finanças / Basing on empirical studies, Behavioral Finance seek to demonstrate that investors not always have a rational posture when it comes to making decisions that might involve some sort of risk, according to Neoclassical Finance Theory. This paper aims to contextualize recent studies and respond to the empirical investigation on Kahneman and Tversky’s (1979) seminal article, which approaches The Prospect Theory and constitutes the basis for Behavioral Finance. The results of the investigation will simultaneously be compared to those of Kahneman and Tversky (1979). The results, which have been specifically found in this population, show that the results of the samples are similar, and even in different populations and different periods, individuals tend to behave, more often than not, just as opposed to the arguments of the Neoclassical Finance Theory

För att få bukt med lågkonjunkturen efter finanskrisen 2008 förde Sverige en expansiv penningpolitik. Även om Sverige tog sig ur krisen relativt smärtfritt följdes det av en period med deflation. Det ledde till att reporäntan 2015 för första gången sänktes under nollgränsen, och därmed tog den svenska penningpolitiken ett historiskt steg för att nå inflationsmålet. De låga räntorna har lett till att priserna på bostadsmarknaden har skenat iväg och de svenska hushållens skulder har ökat avsevärt där den genomsnittliga skuldkvoten är uppe i 343 procent. Från de penningpolitiska protokollen uttrycker Riksbanken en stor oro för denna utveckling och föreslår riktade åtgärder i bostads-, och skattepolitiken. Syftet med denna uppsats är att undersöka effekterna av penningpolitiska åtgärder samt utvecklingen av bostadspriserna har haft på de svenska hushållen skulder. Genom en VAR-modell, Granger-orsakssamband, Impulse-response test och stresstester har denna studie kunnat påvisa och kartlägga vad som händer med de svenska hushållens skulder vid en eventuell räntehöjning. Resultaten visar att en räntechock mellan 3–5 procent minskar framtida skuldsättning, och ekonomin anpassar sig till jämvikt efter 5–8 perioder vilket representerar 15–24 månader. Den ger därmed ett starkt stöd för penningpolitikens kausalitet. Resultaten visar dessutom att det finns hushåll med låg disponibel inkomst som lever under existensminimum idag, och vid en räntehöjning överstiger några hushåll sitt existensminimum med nästan 50 procent. Studiens teoretiska del ger en förklaring om penningpolitikens jobb och dess flöde till hushåll och företag. Den tar även upp tidigare forskning som har undersökt marknadsbeteende hos hushåll.

Prospect theory (Tversky & Kahneman, 1979) predicts that decision-makers work to avoid loss and maximize gains, even when outcomes are expected to be equal. Aversion to loss, and the feelings associated with loss, operates as a strong, often unconscious, bias that guides cognitive understanding of choice and consequently decisions. Prospect theory explains that faming choices around losses biases decision-makers to be more risk-seeking in order to avoid the feelings associated with loss. “The aggravation that one experiences in losing… appears to be greater than the pleasure associated with gaining the same amount” (Kahneman & Tversky, 1979, p. 279). Therefore, prospect theory explains how language framing can affect decision-making under uncertainty. Relatedly, social conflict is resolved by making choices (Diederich, 2003) and often involves a negotiation process that is affected by how negotiators perceive their situation (Schweitzer, et al., 2005). Yet prospect theory is widely underutilized in the context of social conflict (see Barberis, 2013; Butler, 2007). Therefore, this dissertation (1) tests the impact of loss and gain frames on decision-making within a social conflict involving a landlord, (2) examines the boundaries of the theory, and (3) offers insight about the implications of social conflict framing and language on decision-making. Results show that decision-making in a social conflict is significantly influenced by language framing. Loss frames and individual fault frames are two barriers to better conflict. Specifically, loss frames resulted in more negative affect for participants and less collaboration with the landlord. Gain frames resulted in more cooperation by participants. However, these effects were moderated by fault frames, indicating that, within a conflict, the feelings associated with being at fault may be more important than the feelings loss and gain frames evoke. The one exception where language framing may not be as effective is when participants had a prior experience of a similar conflict. For example, being a landlord, and being comfortable with conflict interacted with the language frames and, in some cases, prior experience was a stronger predictor of emotions and decision outcomes. Finally, emotions were found to be highly relevant to language framing and decision-making. Although all frames had some effect on emotion, negative emotion was much more affected by individual loss. Positive emotion was most strongly affected by joint and neutral fault conditions. These findings suggest that negative emotions are easily manipulated by imagining what we might lose individually, whereas positive emotions are more affected by believing we are not alone in the conflict. In support of prospect theory, framing a conflict around loss can make others feel worse about the conflict and about decisions. However, it is more difficult to make others feel positively about a conflict simply by reframing the conflict in terms of gains. Instead, in a social conflict, language frames around joint fault was the best predictor of positive affect. The implications of these findings are discussed. Keywords: Prospect theory, cognitive bias, negotiation, functional conflict / Media & Communication