The purpose of this thesis is to integrate behavioral finance with market microstructure and financial decision-making. Specifically, I focus on two issues concerning the integration of psycho-physiological mechanisms and the informational content of prices in financial markets: firstly, the role of emotions in financial decision making and how as an adaptive mechanism, they show to be more suitable for survival than pure rationality (in an economic sense); and secondly, the empirical and theoretical testing of how cognitive illusions and polysemy affect the informational content of prices.

The purpose of this thesis is to integrate behavioral finance with market microstructure and financial decision-making. Specifically, I focus on two issues concerning the integration of psycho-physiological mechanisms and the informational content of prices in financial markets: firstly, the role of emotions in financial decision making and how as an adaptive mechanism, they show to be more suitable for survival than pure rationality (in an economic sense); and secondly, the empirical and theoretical testing of how cognitive illusions and polysemy affect the informational content of prices.

The aim of this thesis was to explore the experiences of black, married, working, South African women in relation to financial decision-making processes within private households from a working-woman’s perspective. The focus was on married women in middle and senior management positions in their workplaces. Following a literature review to accumulate empirical evidence from similar studies in the areas of Economics, Sociology, Psychology, Feminism and Economic Psychology, eight, individual, semi-structured interviews were conducted with black South African women in managerial positions to establish the women’s understanding of the meaning of money, concepts and practices of sharing of monetary resources between husband and wife in the household, the allocation of money as a resource in the household, control of money between husband and wife in the household, and decision-making processes between husband and wives. The key findings of the study were: · The diverse construction of the meaning of money. Women’s views on money had an impact on how they viewed their roles in household financial management and decision-making. · The absence of equal sharing of money and the existence of breadwinning/caregiver ideologies. Three patterns of money management were identified. Joint pooling, where equality of sharing, control and decision-making was greatest, was associated with higher income levels and availability of personal spending money. The female whole wage system, with minimal control and joint decision-making, was associated only with women with high-level income and minimal personal spending money. The independent managed system was associated with completely separate money management, unequal sharing of money, increased power, inequality in decision-making, and increased personal spending money by the breadwinner. · The pattern of financial allocation adopted had an influence on control and decision-making in the household. In all the systems of financial allocation adopted, women indicated that their partners had a final say in the financial decision-making processes. The study highlights some policy implications of inequality in financial decision-making. Due to the fact that household based analysis assumes that financial decision-making is shared equally in the households, women and children will most of the time lose out when this is not the case. It was therefore recommended that a deeper understanding of household decision-making may help the policy makers and researchers alike to focus on women in a more effective way, for example, by designing empowering programmes that will assist women to be involved in the financial planning and decision making in their households. / Dissertation (MA (Research Psychology))--University of Pretoria, 2005. / Psychology / unrestricted

The study focused on examining the saving and investment behaviours of South Africans. There has been no extensive research in existing literature that has focused on this area of study. This study intends to extend the understanding of what factors contribute to the decisions individuals make about saving and investment. The primary research objective was to explore and empirically test the statistical significance of income, education and gender related to the use of suitable financial products and investigate optimal ways to save and invest. This was a quantitative study which used secondary data obtained from the Human Science Research Council database gathered through a structured questionnaire. A sample of 2,972 individuals across the country participated in and completed the survey. The results illustrated that low-income participants saved less through informal saving schemes than high-income participants, but the statistical significant difference between these groups is too small. The findings also showed that less-educated participants used predominantly more formal saving products than highly educated participants and the statistical significant difference between these groups is large. Finally, the findings highlighted that females make better investment choices than males, but the statistical significant difference between these groups is too small. This study illustrated that low savings and investment in South Africa is influenced by the type of financial products used and also demographic factors such as income, education and gender. / Mini Dissertation (MCom)--University of Pretoria, 2020. / Financial Management / MCom (Financial Management) / Unrestricted

This dissertation investigates some of the factors affecting modern household finance decisions in the United States using natural experimental variation and administrative data. In Chapter 1 I estimate the effects of financial education on retirement savings decisions. Between 2007 and 2008 the U.S. Army implemented a mandatory 8 hour Personal Financial Management Course (PFMC) for new soldiers. Staggered implementation across locations and time provides quasi-experimental variation in whether an individual received the training. I find that the course has large and lasting effects on individual retirement savings in the Thrift Savings Plan, a tax-deferred account similar to a 401(k). The course doubles savings, has significant effects throughout the distribution of savings and the effects persist out to two years. The mechanism for the effects is likely a combination of both human capital and behavioral assistance. In Chapter 2 I estimate the effects of financial education on a variety of other economic behaviors. I rely on the same natural experiment as in Chapter 1 but I use individually matched credit data to estimate the effects of financial education on credit scores, credit balances for several types of accounts, monthly payments and adverse legal actions. In some areas I find that the PFMC has beneficial effects, reducing cumulative account balances (especially for automobile accounts) and aggregate monthly payments. In other areas, including credit scores, the probability of being active in the credit market and the number of adverse legal actions, the PFMC has no statistically significant effects on financial behavior. In Chapter 3 I estimate the effects of stress on financial decision-making. I use the natural variation in the casualty rates faced by individuals deploying overseas an exogenous source of stress and I measure the effects of this stress on individuals' participation in the Savings Deposit Program (SDP), a risk-free 10% annual percentage rate savings account. I find a modest and statistically significant negative relationship between the stress of casualties and SDP participation on the order of 5%. Some failures of the randomization test and the confounding effects of overall activity levels and rural locations cannot be eliminated as a source of the observed savings differences and as a result, these results should be considered suggestive evidence of the adverse effects of stress on financial decision-making.

This doctoral thesis consists of 4 self-contained chapters, bound together by their focus on household behavior and social interaction: Bargaining over Risk: The Impact of Decision Power on Household Portfolios. This paper provides an analysis of the internal financial decision-making process of households, employing a unique panel of household finances of the entire Swedish population. Exploitation of a source of exogenous variation in sex-specific labor demand reveals that the distribution of decision power among spouses is a driving force behind the aggregation of spouses’ preferences on financial decision making. Peer Effects and Academic Achievement: Regression Discontinuity Approach. The estimation of peer effects in schools has received much attention in recent years but convincing estimates are hard to produce due to self-selection. This paper overcomes this problem by employing a regression discontinuity design where student assignment into high-ability classes constitutes the source of identifying information. Domestic Equality and Marital Stability: Does More Equal Sharing of Childcare affect Divorce Risk? There is an unanimity that divorce wreaks havoc upon families in which it occurs and individuals growing up in a one-parent family are more likely to deal with term economic and social difficulties. Identifying means by which divorces can be reduced is therefore an important task from a public policy perspective and this paper investigates whether more equal sharing of childcare is successful in doing so. Do Classroom Peers Matter in an Early Tracking System? The potential for peers to affect educational achievement of students is central to many important policy debates, for instance on the impacts of ability tracking. Whether tracking affects efficiency and equality of opportunities depends on how peers enter the educational production function and this paper provides estimates of this. / <p>Diss. Stockholm : Handelshögskolan, 2014. Sammanfattning jämte 4 uppsatser</p>

This dissertation aims to address the importance of financial literacy within the capability approach framework in the context of microfinance institutions’ clients in Indonesia, by raising four main issues. The first touches on financial capability and specifically focuses on its conceptualisation, predictors, and relationship with quality of life. A participatory method was employed to understand whether financial literacy is viewed as an important element of financial capability. An index of financial capability was built to investigate factors predicting financial capability and the relationship between financial capability and quality of life. The results suggest that socio-demographic discrepancies in financial capability exist, and financial capability is relevant for the improvement of quality of life. The remaining three issues centre on the instrumental value of financial literacy. In the second part, it is proposed that financial literacy is a relevant conversion factor. Within the capability approach literature itself, there is a lack of empirical discussion on conversion factors. It can be concluded that financial literacy is associated positively with conversion rate efficiency. The third research topic examined is the role of financial literacy in household financial decision-making authority. Previous studies have used household decision-making authority as a reflection of agency, which is an important building block of the capability approach. This thesis focuses on financial decision making, which is often perceived as “difficult”, “boring”, and “full of uncertainties”. It is suggested that the relationship between financial literacy and household financial decision-making authority is complex and contingent upon various factors. The role of financial literacy in the relationship between financial decision-making authority and subjective well-being is the last topic investigated in this dissertation. While decision-making authority has been argued as a reflection of human agency and source of power within households, it can also be perceived as a burden. These two interpretations of authority lead to an unclear relationship between household financial decision-making authority and subjective well-being. While a negative relationship between household financial decision-making authority and subjective well-being can be found among those with low levels of financial literacy, a similar correlation is absent among those who score high in financial literacy. This suggests that skills are important for people to value agency.

Purpose: Retirement planning has been declining rapidly all over the world due to the shift of self-funding mechanisms, such as moving from a Defined Benefit (DB) plan to the Defined Contribution (DC) plan, where individuals are required to manage their own financial wealth. Due to this rapid shift, there has been an increase in demand for financial advisors to assist individuals with decision-making and explain complex financial concepts with the perception of guiding households to build their retirement wealth. The aim of the study is to examine the relationship between retirement planning and financial advice as a predictor for retirement adequacy to determine if the latter will have any influence in helping South Africans be financially independent when they retire. This study was compelled by the fact that no or limited prior studies have been conducted in the South African context on the relationship between financial advice and retirement planning. Design/methodology/approach: In order to investigate the relationship and influence of financial advice on retirement planning, a South African Social Attitudes Survey that was conducted in 2011 by the Human Sciences Research Council was used. The chi-square and the logistic regression statistical techniques were applied to test the study hypotheses using the data from the survey. The following hypotheses were included: H0: There is no relationship between retirement planning and financial advice. H1: There is a relationship between retirement planning and financial advice. H0: There is no relationship between socio-demographics and retirement planning. H2: There is a relationship between socio-demographics and retirement planning. H0: There is no relationship between socio-demographics and financial advice. H3: There is a relationship between socio-demographics and financial advice. Findings: The results indicate that there is a positive relationship between retirement planning and financial advice. The more individuals seek financial advice the more they tend to adequately plan for retirement. Practical implications: In view of the strong relationship between the two variables, employers, government and institutions should prioritize making financial advice an essential part of retirement planning for employees. / Mini Dissertation (MCom)--University of Pretoria, 2020. / Financial Management / MCom (Financial Management) / Unrestricted

This dissertation consists of two essays on the impact of hope on financial decision making. While hope is a commonly experienced positive emotion, research on the impact of hope on consumer decision making is relatively sparse. The first essay examines the impact of hope on gambling intentions. Findings from seven studies, including one consequential, demonstrate that in a gambling context, hope leads to suboptimal decisions when the focus of hope is on winning. We theorize and show empirically that this effect occurs because hope triggers experiential processing, which in turn increases gambling, interestingly without affecting rational expectations of winning. Evidence from a variety of gambling contexts suggest that hope leads to both intent and actual gambling behavior. This effect of hope on gambling does not hold for individuals low on trait experiential processing and is attenuated when individuals are prompted to not rely on their feelings. Thus, the authors contribute to the literature on hope by providing a detailed understanding of how hope impacts processing of information, which in turn leads to suboptimal decisions in a gambling context. More broadly, this work offers implications for policy makers and consumers to understand and to become aware of how everyday positive emotion can be detrimental to consumer welfare. The second essay examines the impact of hope on savings. Across five studies, this research displays that hope increases willingness to save. The effect of hope on savings intention is mediated by hope's focus on the future. When hope is no longer focused on the future but is instead focused on the past, this effect disappears. To rule out positive emotion in general as a driving effect, we examine pride, a positive emotion which is generally focused on the past and find that pride does not lead to savings intention unless the focus of pride is shifted to the future. We also examine an alternative potential explanation that a sense of closeness with one's future self is driving the effect of hope on savings intention but do not find support for this, rather it is a future time perspective that mediates the effect of hope on willingness to save. These findings and their implications for research on positive emotion, time perspective and financial decision making are discussed. / Doctor of Philosophy / This study consists of two essays on hope's impact on consumer decision making. Essay 1 examines a negative side of hope, namely how hope may motivate gambling intentions. Although hope is commonly thought of as a positive entity, could hope actually trap an individual, leading to suboptimal decisions? We find that hope of winning increases gambling intentions through experiential (or emotional) processing. When individuals are instructed to not rely on their feelings, this impact of hope on gambling intentions disappears. We also find that for individuals who tend not to utilize experiential processing, there is no impact of hope on gambling. Essay 2 looks at a positive consequence of hope: how hope motivates savings. We find that hope's focus on the future leads to motivation to save for one's future. When the focus of hope is shifted to the past, the impact of hope on saving disappears. We compare hope to another positive emotion, pride, as pride differs from hope by its typical focus on the past. We find that pride does not motivate savings unless its focus is shifted to the future. We rule out an alternative explanation for why hope may motivate savings by looking at sense of closeness with one's future self. We find that while a future time perspective mediates hope's impact on savings, sense of closeness with one's future self does not. The findings from these two essays add to the scarce literature on hope's impact on consumer decision making by providing two contrasting consequences of hope.

Do investment portfolios meet the needs and preferences of investors? Can the portfolio selection process be improved? Traditionally, investor preferences have been identified using risk tolerance questionnaires. These questionnaires have recently attracted a fair deal of criticism. However, there has been little focus as to whether the questionnaires are useful in predicting investors' risk-taking behaviour. In this thesis, an explanatory sequential mixed methods approach was employed to find answers to the primary research question: what factors determine risk-taking behaviour in investment decisions? This thesis looked at the risk-taking behaviour of investors in Canada (N=192) and the risk-taking advice provided by financial advisers in Canada (N=155), collectively risk-taking decisions. The results suggested that return expectations and demographic variables were important predictors of risk-taking decisions, whereas risk tolerance questionnaires were not. Further investigation suggested that investment literacy impacted risk-taking decisions while investment experience impacted both return expectations and risk-taking decisions. In a novel contribution by this thesis, additional perspective was provided by qualitative analysis using semi-structured interviews with investors and advisers. From the results of the qualitative analysis, the author suggests that discovery and self-discovery, a consistent approach and a focus on process versus outcome are key attributes valued by both investors and advisers. The thesis concluded with implications and recommendations for stakeholders, including a greater focus on return expectations, more training in discovery for advisers, simulating investment experience for prospective investors and including investment literacy in school curricula.