This thesis consists of three self-contained essays in the fields of banking and portfolio choice. Banking and Optimal Reserves in an Equilibrium Model: I address the question of reserves in banking, particularly the fact that reserves are substantially larger than the stipulated reserve requirements by Bank of International Settlements. My contribution is to show that when the underlying values of borrowers are correlated, banks should hold positive reserves, regardless of the regulation. I use a derived distribution for debt portfolios to show that intermediation in a debt market will outperform direct lending, even if intermediaries are allowed to default. The model used is a generalization of Williamson (1986), with Costly State Verification as asymmetric information. By using a factor model for the value of entrepreneurs' projects, I introduce a positive probability for banks to default. It is shown that, in equilibrium, banks choose to hold capital reserves that are almost large enough to eliminate the expected auditing cost for their depositors. The reason is that auditing does not provide any utility and hence, the cake to be split between banks and depositors is enlarged by reserves as an insurance against bad outcomes. It is also shown that the more correlation there is in the debt portfolio, the larger is the optimal reserve level. This could explain why small regional banks in Sweden often have more than twice the reserve level of their nation-wide competitors. Optimal Rebalancing of Portfolio Weights under Time-varying Return Volatility: This paper considers horizon effects on portfolio weights under time varying and forecastable return volatility. The return volatility is modeled as a GARCH-M, which is sufficiently general to encompass both constant and time varying means. The analysis confirms earlier results, namely that there are no horizon effects when the stochastic process, which governs asset returns, has a constant mean. However, when time varying and forecastable volatility is included in the mean equation, there are horizon effects. I show three features to be of importance for the horizon effect: First, the size of the parameter on conditional volatility in the mean equation and second, persistence in conditional volatility. Third, the asymmetry in volatility has some effect. In addition, the parameter of relative risk aversion is important. For low levels of risk aversion, only very small effects on portfolio weights are present; when the level of risk aversion increases, so does the effects on portfolio weights. Portfolio weights increase for the first 2-3 years when the investment horizon is increased; the total effect slightly exceeds 10%. Can Parameter Uncertainty Help Solve the Home Bias Puzzle? A well-known puzzle in international finance is the equity home bias. This paper illustrates a mechanism where exchange rate estimation risk causes equity home bias. Estimation risk is introduced into a standard mean-variance portfolio framework by having return time series with different lengths. We argue that the exchange rate return history, which is a part of the local currency return on a foreign investment, is likely to be substantially shorter than the available return histories of equity indices due to, for example, exchange rate regime shifts. To econometrically deal with return histories of different lengths we utilize a framework devised by Stambaugh (1997). The impact of estimation risk on an optimal portfolio is tested with data from Sweden and the U.S. Our results suggest that explicitly accounting for estimation risk causes the domestic investor to increase his fraction of domestic assets. While the introduction of exchange rate estimation risk is not powerful enough to explain the whole home bias observed in data, the results of this paper illustrate a mechanism that is often overlooked in discussions of international portfolio diversification.

Svenson (2009) har visat att olycksrisker, restidsvinster ochinbromsningshastigheter i trafiken skattas med systematiska fel.Svensons studier har replikerats i denna studie för att se om de biassom tidigare upptäckts består. Studien undersöker också om det finnsen korrelation mellan storleken på bias och resultatet på subjectivenumeracy scale (SNS). Fagerlin et al. (2007) utvecklade SNS som ettverktyg för att mäta den subjektiva upplevelsen av en personsnumeracy. I denna undersökning har SNS översatts till svenska frånengelska och skalegenskaperna för den svenska versionen har ocksåundersökts. Undersökningen har gjorts via en enkät besvarad av 61undersökningsdeltagare. Resultaten visar att bias består och att ingenkorrelation finns mellan storleken på det fel en person gör ochdennes poäng på SNS-skalan. Intressant är att upplevelsen av högnumeracy alltså inte tycks vara till någon hjälp för att skattatrafikproblemen mer korrekt. Problemet med hur det lämpligast lärsut hur bättre bedömningar av trafikproblem, av betydelse förtrafiksäkerheten på våra vägar, görs är en utmaning för framtidaforskning.

Cognitive theories claim that phobias involve unconscious processing and that anxious individuals search the environment for threatening stimuli and therefore detect them more rapidly. However, evidence for this is mixed and suggests that anxious individuals do not detect threat more accurately but are more liberal to report that they detected threat even if there was no actual threat (response bias). In this study, 55 women performed a detection task with pictures of snakes, spiders, and guns. The pictures were backward masked to reduce their visibility. Participants also filled in questionnaires that assessed their fear and disgust. As found in previous studies, detection performance did not correlate with fear. However, inconsistent with previous results, disgust sensitivity correlated with lower detection performance of snakes, and response biases varied with fear of spiders or snakes. These findings provide mixed support for notions of relationships between fear and disgust in threat detection.

Syftet med föreliggande studie var att försöka reda i litteraturen kring två välkända begrepp inom Affective Forecasting nämligen Impact Bias, som innebär att människor har en tendens att överskatta i vilken utsträckning de kommer att uppleva en viss känsla i en framtida situation än vad som senare visar sig vara fallet, och Empathy Gaps, som innebär att människor har en tendens att underskatta i vilken grad känslotillstånd kommer att påverka deras preferenser i en framtida situation samt pröva dessa begrepp i en och samma enkätundersökning. Etthundra sextiotvå studenter, slumpvist uppdelade i två grupper, Känslogrupp och Preferensgrupp, deltog frivilligt i undersökningen. Enkätundersökningen var en mixad design med grupp (känsla kontra preferens) som mellangruppsfaktor och förtest kontra eftertest som inomgruppsfaktor. I studien visade samtliga gruppers resultat i linje med Impact Bias teorin, dvs. att deltagarna i både Känslogrupp och Preferensgrupp skattade lägre i eftertest (actual) än pretest (forecasting). Resultatet diskuteras bla. utifrån Construal Level Theory, CLT. Förslag på vidare forskning ges.

It is currently unknown how lie detection accuracy is affected when someone is speaking in his or her second language. We examined whether language proficiency had an impact on lie detection. We hypothesized that when judging the veracity of second-language speakers, participants would be better able to discriminate between truth- and lie-tellers and would have bias toward picking ‘lying’ since they may display cues associated with lying when communicating.We collected video footage of native- and second-language English speakers who lied or told the truth about a transgression. Undergraduate students (N = 51) then judged the veracity of these clips and indicated how confident they were in their ratings. Participants were most accurate and confident when judging native-language truth-tellers. In addition, participants were more likely to exhibit a truth-bias when observing native-language speakers, whereas they were more likely to exhibit a lie-bias when viewing second-language speakers. Implications for the justice system will be discussed. / UOIT

La tesis se centra en los estudios de la producción inelástica de las partículas cargadas en el colisionador LHC que opera en la frontera de la energía del centro de masa de 7 TeV. Los datos corresponden a 16 μb-1 de la primera recogida de la luminosidad integrada por el detector ATLAS, a principios de 2010. Las secciones de la producción de las partículas cargadas fueron comparadas con la variedad de los populares modelos fenomenológicos de la QCD suave. Los resultados reportados en la tesis constituyen una muestra de datos correspondiente a una nueva región cinemática de QCD. Por lo tanto, el leve (10-20)% desacuerdo entre los datos y las predicciones de diferentes modelos fenomenológicos no fue una sorpresa. Los resultados reportados estuve utilizados para ajustar los modelos existentes de soft QCD para reproducir de manera adecuada la hadrónica presente en las colisiones del LHC. El tipo de estudios presentados en la tesis pertenece a una línea de investigación bien establecida en el ámbito de la física de alta energía (HEP), que consiste en el pleno re-descubrimiento del Modelo Estándar antes de tratar de avanzar más. Los estudios presentados en la tesis han conducido ya a una publicación en una revista líder de la física de altas energías, PLB (marzo 2010), y otro articulo está en preparación. Tuve un papel importante en esta primera publicación de los resultados de ATLAS. Otro punto importante de los trabajos presentados en la tesis puede ser resumido de la siguiente manera: 1) Muy bien estructurado y buena presentación de los estudios realizados. 2) Meticuloso seguimiento de los cánones de análisis recogidos en la comunidad HEP. 3) El uso adecuado de la información más actualizada de simulaciones de soft QCD. 4) Estudios cuidadosos de los efectos de las condiciones del detector y de la eficiencia del trigger para seleccionar los resultados. 5) La evaluación cuidadosa de los errores sistemáticos. / The thesis is focused on the studies of the inclusive inelastic production of the charged particles at the LHC collider that operates at the frontier center-of-mass energy of 7TeV. The analyzed data correspond to about sixteen inverse micro-barn of the very first integrated luminosity collected by the ATLAS detector by the beginning of 2010. Having fully taken advantage of above factors, scrupulous studies performed in the thesis resulted in the measurements of the charged particles inclusive production cross-sections that were compared to the variety of popular phenomenological models of the soft QCD. The results reported in the thesis constitute a novel data sample corresponding to a new kinematic QCD region. Thus, the mild (10-20)% disagreement between the data and the predictions of different phenomenological models came as no surprise. The reported results were used to adjust existing soft QCD models to adequately reproduce the busy hadronic environment present in the LHC collisions, thus reinforcing current theoretical framework. The type of the studies presented in the thesis belongs to a well established research line in the field of high energy physic (HEP) that consists of full re-discovery of the Standard Model in the environment of new collider experiment before attempting to move further. Studies presented in the thesis have already led to one publication in the leading high energy physics journal, PLB (March 2010), and another paper is in preparation. I took an important role in this, very first publication of the ATLAS results, often considered as an informal criteria for the PhD thesis merits inside of the HEP community. Additional strong points of the work presented in the thesis may be summarized as following: 1) Very well structured and focused presentation of the studies performed. 2) Meticulous following of the analysis canons adopted in the HEP community. 3) Appropriate usage of the most up-to-date soft QCD simulations. 4) Careful studies of the impact of the detector conditions and trigger selection efficiency on the results. 5) Careful evaluation of the systematic errors on the reported cross-sections and distributions.

The purpose of this research is to define racialized textbook bias, conduct a content analysis of Georgia history textbooks, and answer the following question: how is race framed in contemporary Georgia history textbooks? A content analysis of nine Georgia history textbooks was completed for grades two and eight. A Du Boisian theoretical framing of race prejudice as the macro-social condition of the micro-social process of race was an integral component of the content analysis. The findings revealed the existence of racialized textbook bias in the form of marginalization, compartmentalization, and omission suggesting the continuation of White supremacy and Black oppression in the process of education in Georgia public schools.

The present research explored the effects of Situational Attribution Training (Stewart, Latu, Kawakami, & Myers, 2010) on affective bias utilizing facial electromyography (EMG). Participants viewed a slideshow of randomly presented photographs of both and White and Black American men while rating how “friendly” each individual appeared. Simultaneously, corrugator and zygomaticus region activity, linked with positive and negative affect, respectively, was measured. Of these participants, half were randomly assigned to complete Situational Attribution Training beforehand. Results for EMG activity suggested no significant differences in EMG activity for White compared to Black photographs for either the training or control participants; thus, this study did not find evidence of affective bias by way of corrugator or zygomaticus activity. However, errors in slideshow presentation prevent clear interpretation of these results. Suggestions for future research and ways in which bias errors can be avoided are discussed.

Grupptillhörighetens påverkan på uppfattningen av politiska uttalanden är något som inte tidigare studerats inom svensk forskning. I denna experimentella studie deltog 96 studenter, varav 25 män. Genom en enkätundersökning testades avsändarens betydelse på hur politiska uttalanden värderas. Syftet var att se om ett politiskt uttalande uppfattades olika beroende på avsändare och huruvida deltagarens grupptillhörighet påverkade uppfattningen om uttalandet. Fyra olika enkäter delades ut, innehållandes samma uttalande men olika påstådda avsändare. Det antogs att deltagaren skulle uppfatta uttalandet mer positivt när det kom från det parti deltagaren sympatiserade med. Det antogs även att uttalandet från Sverigedemokraterna skulle uppfattas mer negativt än de andra uttalandena bland de deltagare som inte röstade på Sverigedemokraterna. Deltagarna skattade uttalandet med hjälp av tio värdeladdade ord. Resultatet visade att individer såg mer negativt på ett uttalande som påstås komma från Sverigedemokraterna än när uttalandet sades komma från övriga påstådda avsändarna. Resultaten diskuterades utifrån förutsättningarna vid materialinsamlingen.

Finance taught in schools generally starts with the efficient market hypothesis, which holds the assumptions of rational investors and markets where all information available is reflected. In recent years however, a lot of critique has been given to efficient markets and its assumptions of rationality. The greatest reason to this is because of crashes and irregularities in the market. The field of behavioural finance has been in existence for many years but is not as established as the efficient market hypothesis. It says that investors may act irrational and are mostly trying to explain the reasons why. People’s behaviour is being closely studied in order to see patterns of behaviour and this has resulted in different heuristics and biases. Heuristics are instances that come to mind when making a decision and differ a lot depending on what kind of decision you are making. Since there are many different heuristics, this thesis only focused on one: the affect heuristic. The method was constructed in a specific way in order to show if the students showed affect in their answers. Also, a check for home bias was made. This thesis presents the behaviour of two different groups of students, finance students from Sweden and MBE-students from Germany. It was proved that both of the groups were acting irrational in their investment decisions. The reason to their irrationality is both because the method was constructed in a way to strategically mislead them but also because of the data collection. There were also some differences noticed depending on age groups, former studies in finance and work experience in finance. The affect heuristic was clearly shown in the answers by both groups of students. A home bias was also noticed in the answers. It was proven that 10,3 percent of the Swedish students invested in Swedish companies in both their first and second choice, even though the three best companies were German. None of the German Students decided to invest in a Swedish company in both the first and second choice.