This dissertation consists of four essays. Essay 1: Studies of Framing, Judgement and Choice. Essays 2-4, the main essays in this dissertation, present studies within the research domain of economic psychology. The focus in these three essays is to investigate how people form their judgements and their choices in different contexts. In order to position these three essays in their research context an introduction to economic psychology as a research field is presented in Essay 1. In this essay the experiment as a research technique and its advantage and disadvantage are also discussed. Essay 2: The Utility and the Curse of Winning an Auction – An Experimental Analysis. A general assumption in auction theory is that overbidding in auctions occurs because bidders do not adjust their bids to the information asymmetry in the auction market. Two auction experiments were conducted in order to investigate whether other factors, such as the subjects’ desire to win an item, or prevailing market conditions can explain overbidding. The experiments were designed as an emulation of a Treasury securities auction. Students in business administration and professional actors in the Swedish money market participated in the experiments. Furthermore, by offering an award to the best end-of auction performer(s) the subjects were also encouraged to fulfill their task to the best of their ability. In one experiment the bidders were offered a notably high award to the best performer. In another experiment bidders were offered a moderate award. The bids were on average submitted close to to the calculated expected value of the items. The mean bids in the two auction types were not significantly different indicating no effect on the general bidding due to the size of the award. Two main strategies were distinguished in this study indicating that the auction institution attracted bidders differently. The bidders who purchased no items in the auctions accommodated early to the strategy close to the items’ calculated expected values thus allowed them to optimize their financial outcome from the auctions. The bidders who purchased one or more items used a strategy that allowed for some temporay ‘controlled’ gambling. In the competitive auction context the bidders who intended to buy an item consistently had to submit bids in excess of the calculated value. Otherwise their bidding was moderate and in line with that of the nonbuyers. There was a tendency among the buyers to express a higher interest in financial risk taking and arousal-stimulating activities than among nonbuyers in the auction experiments. In real-world auctions risk taking may be less controllable and manageable and the effects from excessive bidding may be less beneficial to the winning bidders. Essay 3: Who is Cursed in a Tresury Securities Auction? – An Empirical Analysis of the Swedish 6-month Treasury Bill Auctions from 1991 to 1994. This study investigated whether information is perfectly distributed in the Swedish 6-month Treasury bill auctions or whether any private auction information systematically affected the price system and thereby the efficiency in the distribution of the issued securities in the auction market. It was furthermore investigated whether the prevailing auction rules generated strategic trading among bidders. The study covers a period from January, 1991, to June, 1994. With a time series technique, the auction variables were each divided into an anticipated and an unanticipated component from the variable’s past history as derived from an established time series model. The anticipated component shows the publicly known information about the value of a security while the unanticipated component shows information that is new to the market for instance information about recent deals and liquidity needs. Regression analyses showed that the winning bidders succeded in purchasing the Treasury bills in the auctions at prices that were, on average, lower than that of an identical bill in the secondary market. Furthermore, results from the regressions indicate that some privileged bidders traded strategically in the auction market by withholding private information and utilized their information so as to gain a more advantageous position in the auctions. The stable bidding environment provided the bidders in the Swedish 6-month Treasury bill auctions regular and correct feedback. This in turn may explain the bidders’ efficiency in selecting and implementing their bidding startegies and to act rationally and adaptively. In summary, signs of price manipulation indicates that the Swedish 6-month Treasury bill auctions are not fully efficient. Essay 4: Is Confidence in One’s Belief a Matter of Knowledge or of Cognitive Illusion. In many studies on judgement and choice it has been found that people have a tendency to be overconfident in their decisions. Overconfidence in experiments is defined as the general tendency to overestimate the likelihood of having selected the right alternative among a set of avilable answers. In order to investigate wether the selection method is the key to creating as well as eliminating overconfidence two types of two answer-alternative questions were employed in the present study, namely informally selected and representatively selected items. Moreover, to investigate the extent to which perceived difficulty and familiarity could explain confidence level the subjects were also asked to report whether they perceived an item as difficult or familiar. 102 university students participated in two confidence experiments. It was found that a representative selection of items decreased the subjects’ overconfidence but at the cost of poor resolution. Moreover, the results showed increased ‘realism’ when the subjects were asked to make confidence assessments. Also, a reversal of the hard-easy effect was found for perceived difficulty. The results showed that the confidence level could be explained to a significant extent by the subjects’ perception of a question as either difficult or familiar. The subjects tended to display decreased confidence when items were perceived as difficult or very unfamiliar and they displayed increased confidence in the opposite condition. The results in the present study demonstrate the importance of making a distinction between objective and perceived difficulty as determinants of the subjects’ confidence level. / Diss. Stockholm : Handelshögsk.

Diss. Stockholm : Handelshögsk.

Diss. Stockholm : Handelshögsk., 2003.

Diss. (sammanfattning)--Göteborg : Göteborgs universitet, 2006. / Härtill 4 uppsatser.

Diss. Stockholm : Handelshögskolan, 2005.

Diss. Stockholm : Handelshögskolan, 2009.

Political decision making can be analyzed through a plethora of theories. Here Economic Psychology is used as theoretical framework to analyze decision making, both by politicians and voters. The thesis consists of an overview of current research; an econometric study of how the voters in municipal elections react to changes in fiscal policy; and two case studies where the transfer of responsibility from one political level to another are studied, namely the transfer of Elder Care from counties to municipalities, and the transfer of the school system from the national government to the municipalities. It is shown that political actors often take psychological factors into consideration when they design or react to policy proposals. It is also shown the use of a psychological approach can improve the understanding of political decision making, particularly when the processes are complex or involve negotiations. / Diss. Stockholm : Handelshögskolan, 2009 Sammanfattning jämte 4 uppsatser

Bakgrund: År 2020 infördes ett nytt kompetenskrav i SwedSec om ekonomisk psykologi och finansiella rådgivare. Det har under de senaste åren varit stora ekonomiska oroligheter där konsekvenserna av Coronapandemin och det pågående kriget i Ukraina i kombination med andra faktorer har resulterat i rekordhöga inflationsnivåer, vilket i sin tur har resulterat i höjningar av styrräntan. Vid ekonomiskt oroliga tider är det en större risk att personer faller offer för psykologiska fallgropar eller påverkas av psykologiska faktorer. Således är det relevant att skapa förståelse om hur rådgivare påverkas och hanterar psykologiska fallgropar i rådgivningsprocessen. Syfte: Syftet med denna studie har varit att undersöka finansiella rådgivares råd och rekommendationer till kunder under de ekonomiska omständigheterna under första halvåret 2023. Författarna har analyserat hur rådgivare har anpassat sig till de nya kunskapskraven inom ekonomisk psykologi som införts i SwedSecs rådgivningslicens 2020, och utforskat i vilken utsträckning rådgivare uppger att de influeras av psykologiska bias i deras beslutsprocesser. Slutligen har studien syftat till att identifiera metoder som rådgivare använder för att undvika dessa fallgropar och förbättra kvaliteten på deras rådgivning. Metod: En kvalitativ metod har använts i form av nio semistrukturerade intervjuer med finansiella rådgivare. Studien har en abduktiv ansats och axial kodning användes för att analysera de transkriberade intervjuerna. Slutsats: Majoriteten av rådgivarna har låga eller obefintliga kunskaper kring ekonomisk psykologi och de har inte heller vidtagit några åtgärder för att försöka uppfylla SwedSecs kompetenskrav, några rådgivare kommer inte heller ihåg att kompetenskravet infördes. Trots detta är risken liten för att de skall påverkas av psykologiska bias på grund av de använder sig av ett standardiserat rådgivningsverktyg. Studiens resultat pekar således på att rådgivare inte behöver ytterligare kompetenshöjande utbildningar för att motverka psykologiska fallgropar vid rådgivning till kunder, så länge som de använder sig av det rådgivningsverktyget som finns på det finansiella institut som de arbetar på. / Background: In 2020, a new competence requirement was introduced in SwedSec on economic psychology and financial advisors. The past years have seen major economic turmoil where the consequences of the Corona pandemic and the ongoing war in Ukraine combined with other factors have resulted in record high inflation levels, which in turn has resulted in increased benchmark interest rates. In times of economic uncertainty, people are more likely to be influenced by psychological biases and psychological factors. Thus, it is relevant to understand how advisors are affected by and deal with psychological bias in the financial advisory process. Purpose: The purpose of this study has been to examine financial advisors advice and recommendations to clients during the economic circumstances of the first half of 2023. The authors have analyzed how advisors have adapted to the new knowledge requirements about economic psychology introduced in SwedSec's advisory license 2020 and explored the extent to which financial advisors state being influenced by psychological biases in their decision-making processes. Finally, the study aims to identify methods that advisors use to avoid these biases and improve the quality of their recommendations. Methodology: A qualitative method has been used in the form of nine semi-structured interviews with financial advisors. The study has an abductive approach and axial coding was used to analyze the transcribed interviews. Conclusion: Most of the advisors have little, or no knowledge regarding economic psychology and have not taken any measures to try to meet SwedSec's competence requirements, some advisors do not even remember that the competence requirement was implemented. Despite this, the risk of being influenced by psychological bias is small because they use a standardized advisory tool. The results of the study thus indicate that advisors do not need additional competence-enhancing training to counteract psychological pitfalls when advising customers, assuming they use the advisory tool available at the financial institution where they work

The role of trust in social, economic, political, and organizational relations is a research topic that has received much attention during the last decade. Trust has been considered a key variable in various contexts, although it should be noted that many theorists pay little attention to empirically testing their arguments about the importance of trust. It is in the present thesis examined whether trust is an important variable in the context of risk policy.This question was addressed from different perspectives in three empirical studies, which were based on extensive survey data. The first article concerned the case of energy policy and the relationship between people’s perceptions of nuclear risks and their attitudes towards various aspects of energy policy was examined. In the second article it was studied whether trust was an important predictor of perceived risk within and across four European countries. Finally, in the third article, determinants of public trust in organizations were studied. An important finding in the thesis was that determinants of trust varied depending on the organization studied. It was also found that trust was a significant predictor of perceived risk, but the relationship was not very strong. It was suggested that the overall policy implications for risk management should be that there are limits to the possibilities to increase the level of trustworthiness and build public trust. An organization could make strong efforts to build an image of being a competent, open, fair, and credible organization, but still not gain the necessary degree of trust, because public perceptions can be based on certain organizational characteristics that are very fundamental and not easily changed. Furthermore, even if an organization succeeds in building a high degree of public trust, it was found in the thesis that it is possible to trust those responsible for risk management to be very competent and honest, yet perceive risks as high. A number of possible causes for this interesting finding are presented in the thesis. / <p>Diss. Stockholm : Handelshögskolan, 2003</p>