<p>How households and individuals respond to adverse and unanticipated shocks is an important concern for both economists and policy makers. This is especially true in developing countries where poverty, weak infrastructure, and a lack of social safety nets often exacerbate the effects of adverse shocks on household welfare. My research addresses these issues in the context of three economic outcomes and behaviors - early life health and the accumulation of human capital, willingness to take on financial risk, and behavior in the labor market. The results of this research project both adds to our understanding of how life experiences shape individuals' well-being and behavior and how policy can help individuals achieve long-term improvements in the lives following adverse events.</p><p>My research focuses on households and individuals affected by a large-scale natural disaster, the 2004 Indian Ocean tsunami. I utilize data from the Study of the Tsunami Aftermath and Recovery (STAR), a unique longitudinal survey of individuals and households living in coastal communities in Aceh and North Sumatra, Indonesia, at the time of the tsunami. The STAR surveys were conducted annually for five years after the disaster and include a wide range of demographic, economic, and health measures.</p><p>In the first chapter, Child Height after a Natural Disaster, co-authored with Elizabeth Frankenberg, Duncan Thomas, and Jed Friedman, we investigate the immediate and long-run impacts on child health of in utero exposure to stress induced by the tsunami. We investigate whether in utero exposure to stress, as measured by tsunami-induced maternal posttraumatic stress, affected the growth of children born in the aftermath of the tsunami in the critical first five years of their lives. Although previous studies suggest that in utero exposure to stress is related to a number of adverse birth outcomes such as prematurity and lower birth weight, there is little evidence of the impact on linear growth, a strong correlate of later life income. We find evidence that children exposed to high levels of stress beginning in the second trimester experienced reduced growth in the first two years of their lives. We also find evidence that growth reductions largely disappear by age five. This suggests that significant catch-up growth is possible, particularly in the context of pronounced post-disaster reconstruction and economic rehabilitation.</p><p>In the second chapter, The Impact of a Natural Disaster on Observed Risk Aversion, I investigate the short and long-term impacts of the 2004 Indian Ocean tsunami on attitudes toward risk. Attitudes toward risk are important determinants of economic, demographic, and health-related behaviors, but how these attitudes evolve after an event like a natural disaster remains unclear because past research has been confounded by issues of selective exposure, mortality, and migration. My study is the first to directly address these problems by utilizing exogenous variation in exposure to a disruptive event in a sample of individuals that is representative of the population as it existed at the time of the event. In addition, intensive efforts were made to track migrants in the sample population, which is important for this study because migration is common following events like natural disasters and is likely related to attitudes toward risk. I find that physical exposure to the tsunami (e.g., seeing or hearing the tsunami or being caught up in the tsunami) causes significant short-term decreases in observed aversion to risk, especially for the poor, but few longer-term differences. This finding has important implications for the design of effective post-disaster assistance policies. In particular, it implies that post-disaster assistance programs should include aid that is consistent with the observed risk attitudes of the survivors such as job training and capital to start-up businesses.</p><p>In the last chapter, Labor Market Outcomes following the 2004 Indian Ocean Tsunami, I investigate how labor market outcomes changed in coastal communities in Aceh and North Sumatra following the tsunami and the post-disaster recovery efforts. Although restoring the livelihoods of survivors of adverse events is critical for their long-term recovery, there is little evidence from developing countries of how labor market outcomes change after such events. Using the STAR data, I find a significant and persistent increase in paid employment for younger women in urban communities. The increase occurred in communities that were heavily damaged by the tsunami and those that were not, suggesting that the impacts of the disaster on livelihoods are likely long-lasting and extend beyond the communities that were directly stuck by the disaster.</p> / Dissertation

The purpose of this study is to determine the efficacy of anxiety-relief therapy when compared with three other treatment groups (group systematic desensitization; a pseudo-therapy, suggestion, group; and a no-treatment group).

These studies led the experimenter to investigate the use of chemical aversion therapy using anectine as the aversive stimulus with a morphine addict. The success of Thomason and Rathod with heroin addicts suggested that their experimental method would be useful as a reference while designing this study. The treatment hypothesis was that the patient's use of intravenous narcotic drugs would be eliminated through the application of chemical aversion therapy. Chemical aversion therapy was operantly defined as the injection intravenously of anectine into the patient concurrent with his self-injection of his narcotic of choice.

One of the newer techniques to be utilized in the treatment of a variety of behavioral disorders is anxiety-relief conditioning (Thorpe, Schmidt, Brown, and Castell, 1964; Solyom and Miller, 1967; Wolpe and Lazarus, 1966). In its theoretical formulation, reciprocal inhibition by anxiety-relief is similar to Wolpe's reciprocal inhibition by progressive relaxation (Solyom and Miller, 1967). Whereas Wolpe's method utilizes Jacobsonian relaxation principles to provide the medium through which anxiety is reciprocally inhibited, the procedure employed in anxiety-relief conditioning utilizes the relief following termination of an aversive stimulus to set an occasion which will permit reciprocal inhibition to take place. Many of the problems encountered in relaxation induction and control are thus avoided (Wolpe, 1958; Thorpe et al., 1964). Anxiety-relief conditioning appears to have been successful in patients that previously had been unsuccessfully treated by psychotherapy and chemotherapy for as long as 20 years (Myers, 1957; Thorpe et al., 1964; Solyom and Miller, 1967). Solyom and Miller reported successfully treating six of seven phobic patients who complained of severe depression, difficulty in interpersonal relationships and anxiety attacks when meeting people, as well as excessive fear of crowded places. These patients had an average length of illness of 11.1 years, ranging from 2 to 20 years. Patients were treated for a mean of 19.5 sessions with no evidence of symptom substitution or reappearance of the phobic fear upon follow-up (Solyom and Miller, 1967). Although the authors cited above have all reported case studies of successful therapeutic applications of anxiety-relief conditioning techniques, there have been few experimental studies of the efficacy of this technique. A recent experiment failed to refute the hypothesis that noxious stimulation and/or habituation, rather than aversion-relief, contribute to the beneficial therapeutic effects noted. This study left unanswered the question of which variables contribute to aversion-relief conditioning (Solyom, L., McClure, Heseltine, Ledwidge, and Solyom, C., 1972). The present study was undertaken to further explore the relevant variables in aversion-relief conditioning. It was hypothesized that reduction of fear to a phobic stimulus would be significantly greater among subjects who viewed the phobic stimulus while experiencing the pleasant sensation associated with aversion-relief than among subjects who viewed the phobic stimulus after the effects of aversion-relief had presumably dissipated.

Humans exhibit a number of suboptimal behaviours in the wake of a loss. For example, gamblers often ‘chase' their losses in an attempt to break even. Similarly, investors tend to hold on to losing stocks too long in the hope that the declining share price might make a recovery. However, the neural mechanisms that instantiate such behaviour are poorly understood. I begin the introductory chapter with a basic historical overview of fundamental economic concepts, interleaving intersecting ideas from psychology and neuroscience. This leads to a more in-depth exploration of the notion that loss-related behavioural biases might provide insight into the neural mechanisms that underlie risky choice. From this, I argue that rats represent a viable animal model of risky decision- making for neuroeconomic research. The original research presented in Chapters 2 – 5 pave the way toward advancing our current understanding of loss-related biases in behaviour with rat models of risky decision-making. By employing insight from psychology and economics, I developed two models of rat behaviour that can be used to study the neural substrates of loss valuation. I presented the experimental paradigms in Chapters 2 and 5, while demonstrating novel loss-related correlations between the midbrain dopamine system and observed loss behaviour in Chapters 3 and 4. The results presented in Chapter 5 demonstrate that rats are capable of producing behavioural patterns akin to loss aversion and the disposition effect. This work has also highlighted a number of areas for future research. In Chapter 6, I explore potential theoretical implications of the results discussed in previous chapters. In summary, this thesis uses experimental risky decision-making tasks in rats to advance our current knowledge of the ways in which concepts such as loss aversion critically influence our internal representation of value.

Thèse numérisée par la Direction des bibliothèques de l'Université de Montréal.

Face à une globalisation économique toujours plus affirmée, les entreprises doivent mieux prendre en compte l'environnement économique afin d'obtenir et de maintenir un avantage compétitif. L'analyse et l'utilisation stratégique des données financières sont des éléments incontournables de cette lutte. Nous avons donc exploré les liens unissant intelligence économique et finance et avons analysé les raisons derrière un manque de coopération apparent entre les deux champs. L'analyse de leurs développements historiques et théoriques nous a conduits à explorer les apports de la finance comportementale. Nous montrons comment la rupture avec les modèles prônés par la finance "rationnelle" ouvre la porte aux apports de l'intelligence économique. Nous montrons alors, au travers d'un outil d'évaluation des projets d'entreprise, qu'il est possible d'intégrer des paramètres d'analyse afin de mieux prendre en compte certains risques liés aux caractéristiques spécifiques de ces projets / Faced with an increasing globalization, enterprises must strive to take into account their economic environment if they wish to gain a sustainable competitive advantage. The analysis and use of financial information is at the very heart of this struggle, which has led us to explore the links between economic intelligence and finance. While the apparent lack of cooperation between the two fields takes its roots within their historical and theoretical developments, we show how the recent developments in behavorial finance, by moving away from the classical assumptions of efficient markets in equilibrium with perfectly rational agents, have reintroduced the need for economic intelligence. After underlying the limitations and risks linked with the typical assumptions of "rational" financial models we then proceed with the development of a valuation tool with a subjective risk aversion factor and show that we can obtain a finer analysis than with standard capital budgeting techniques

of the master thesis Title: Modeling of risk aversion Author: František Navrátil Department: Department of Probability and Mathematical Statistics Supervisor: Doc. RNDr. Petr Lachout, CSc. Abstract: The thesis discusses various theories that are able to model investor's subjective attitude to risk. The goal of the thesis is to clearly recapitulate possible mathematical approaches and to apply them in a real situation. One of the ways to tackle the problem is to use expected utility theory and a specific shape of a utility function. Another way is to choose a suitable risk measure. Especially useful for the modelling of risk aversion is the class of spectral risk measures that enables investor to choose a risk spectrum that meets his perception of risk. The thesis contains basic definitions concerning stochastic programming - a theory essential to solve the related optimization problems. Keywords: Risk aversion, utility function, probability constraint.

In this companion paper to Broll and Mukherjee (2017), we empirically analyse how exchange rate volatilities affect firms optimal production and exporting decisions. The firms elasticity of risk aversion determines the direction of the impact of exchange rate risk on exports. Based on a flexible utility function that incorporates all possible risk preferences, a unique structurally estimable equation is used to estimate the risk aversion elasticities for a panel of Indian service sector (non-financial) firms over 2004-2015, using the quantile regression method.

We examine risk taking when the bank's preferences exhibit smooth ambiguity aversion. Ambiguity is modeled by a second-order probability distribution that captures the bank's uncertainty about which of the subjective beliefs govern the financial asset return risk. Ambiguity preferences are modeled by the (second-order) expectation of a concave transformation of the (first-order) expected utility of profit conditional on each plausible subjective distribution of the return risk. Within this framework, the banking firm finds it less attractive to take risk in the presence than in the absence of ambiguity. This result extends to the case of greater ambiguity aversion. Given that the competitive bank's smooth ambiguity preferences exhibit non-increasing absolute ambiguity aversion, imposing a more stringent capital requirement to the bank reduces the optimal amount of loans, if the bank's coefficient of relative risk aversion does not exceed unity. Ambiguity and ambiguity aversion as such have adverse effect on the bank's risk taking.