published_or_final_version / Business / Doctoral / Doctor of Philosophy

by Siu-yeung Chan. / Publication date from spine. / Thesis (Ph.D.)--Chinese University of Hong Kong, 1995. / Includes bibliographical references (leaves 254-278). / Chapter CHAPTER I --- INTRODUCTION --- p.1 / Chapter 1.1 --- Background of the Study --- p.1 / Chapter 1.2 --- Research Problems and Objectives --- p.5 / Chapter 1.3 --- Justification for the Study --- p.7 / Chapter 1.4 --- Research Model and Hypotheses --- p.9 / Chapter 1.4.1 --- Research Model --- p.9 / Chapter 1.4.2 --- Research Hypotheses --- p.10 / Chapter 1.5 --- Research Methodology --- p.12 / Chapter 1.6 --- Definitions of Key Terms --- p.14 / Chapter 1.7 --- Scope of the Study --- p.16 / Chapter 1.8 --- Organisation of the Thesis --- p.17 / Chapter CHAPTER II --- LITERATURE REVIEW ON BEHAVIOURAL DECISION THEORY --- p.19 / Chapter 2.1 --- Introduction --- p.19 / Chapter 2.2 --- Behavioural Decision Theory: Historical Development --- p.20 / Chapter 2.3 --- Bounded Rationality --- p.22 / Chapter 2.4 --- Lens Model --- p.25 / Chapter 2.5 --- Heuristics and Biases --- p.27 / Chapter 2.5.1 --- Overview --- p.27 / Chapter 2.5.2 --- Availability Heuristic --- p.28 / Chapter 2.5.3 --- Anchoring and Adjustment Heuristic --- p.29 / Chapter 2.5.4 --- Representativeness Heuristic --- p.31 / Chapter 2.5.5 --- Conjunction Fallacy --- p.32 / Chapter 2.5.6 --- Hindsight Bias --- p.34 / Chapter 2.5.7 --- Order Effects in Brief Updating --- p.35 / Chapter 2.5.7.1 --- Evidence Encoding --- p.36 / Chapter 2.5.7.2 --- Response Mode --- p.37 / Chapter 2.5.7.3 --- Adjustment Weighting --- p.38 / Chapter 2.5.7.4 --- Order Effects --- p.39 / Chapter 2.5.8 --- Framing Effect --- p.40 / Chapter 2.5.9 --- Sunk Cost Effect --- p.42 / Chapter 2.5.10 --- Confirmation Bias --- p.44 / Chapter 2.5.11 --- Accountability --- p.47 / Chapter 2.5.12 --- Base-Rate Fallacy --- p.49 / Chapter 2.5.12.1 --- Reduction of the Base-Rate Fallacy --- p.51 / Chapter 2.5.12.1.1 --- The Relevance of Base-Rate Information --- p.51 / Chapter 2.5.12.1.2 --- The Relevance of Case-Specific Evidence --- p.53 / Chapter 2.5.12.2 --- Effects of Need for Cognition on the Base-Rate Fallacy --- p.54 / Chapter 2.5.13 --- Overconfidence Effect --- p.56 / Chapter 2.5.13.1 --- Calibration and Calibration Curve --- p.58 / Chapter 2.5.13.2 --- Factors Affecting Appropriateness of Confidence --- p.60 / Chapter 2.5.13.2.1 --- Task Factors --- p.60 / Chapter 2.5.13.2.2 --- Environmental Factors --- p.61 / Chapter 2.5.13.2.3 --- Individual Difference Factors --- p.63 / Chapter 2.5.13.3 --- Methods Promoting Appropriate Confidence --- p.64 / Chapter 2.5.13.4 --- Appropriateness of Experts' Confidence --- p.67 / Chapter 2.5.13.5 --- Conceptual and Methodological Issues --- p.68 / Chapter 2.6 --- Contingent Decision Behaviour --- p.72 / Chapter 2.6.1 --- Overview --- p.72 / Chapter 2.6.2 --- Factors Influencing Contingent Decision Behaviour --- p.73 / Chapter 2.6.3 --- Effects of Task Variables on Selecting Decision Strategies --- p.74 / Chapter 2.6.3.1 --- Task Complexity --- p.74 / Chapter 2.6.3.2 --- Response Mode --- p.77 / Chapter 2.6.3.3 --- Information Display Mode --- p.77 / Chapter 2.6.3.4 --- Agenda Effect --- p.78 / Chapter 2.6.4 --- Effects of Context Variables on Selecting Decision Strategies --- p.78 / Chapter 2.6.5 --- Effects of Effort and Accuracy on Selecting Decision Strategies --- p.79 / Chapter 2.7 --- Integrated Framework for Behavioural Decision Theory --- p.81 / Chapter 2.7.1 --- Principle of Bounded Rationality and the Three Research Frameworks --- p.82 / Chapter 2.7.2 --- Lens Model and Heuristics-and-Biases Frameworks --- p.83 / Chapter 2.7.3 --- Lens Model and Contingent Decision Behaviour Frameworks --- p.84 / Chapter 2.7.4 --- Heuristics-and-Biases and Contingent Decision Behaviour Frameworks --- p.85 / Chapter 2.8 --- Chapter Summary --- p.85 / Chapter CHAPTER III --- LITERATURE REVIEW ON BEHAVIOURAL DECISION RESEARCH IN ACCOUNTING --- p.88 / Chapter 3.1 --- Introduction --- p.88 / Chapter 3.2 --- Overview of BDR in Accounting and the Major Determinants of Decision-Making Performance --- p.89 / Chapter 3.3 --- Heuristics and Biases --- p.93 / Chapter 3.3.1 --- Overview --- p.93 / Chapter 3.3.2 --- Availability Heuristic --- p.94 / Chapter 3.3.3 --- Anchoring and Adjustment Heuristic --- p.96 / Chapter 3.3.4 --- Order Effects in Belief Updating --- p.99 / Chapter 3.3.4.1 --- Overview --- p.99 / Chapter 3.3.4.2 --- Model Predictions --- p.100 / Chapter 3.3.4.3 --- Order Effects On Effectiveness --- p.102 / Chapter 3.3.4.4 --- Factors Affecting the Order Effects --- p.103 / Chapter 3.3.4.5 --- Summary of Accounting Research on the Order Effects in Belief Updating --- p.105 / Chapter 3.3.5 --- Conjunction Fallacy --- p.106 / Chapter 3.3.6 --- Framing Effect --- p.107 / Chapter 3.3.7 --- Confirmation Bias --- p.110 / Chapter 3.3.8 --- Hindsight Bias --- p.113 / Chapter 3.3.9 --- Accountability --- p.116 / Chapter 3.3.10 --- Base-Rate Fallacy --- p.118 / Chapter 3.3.10.1 --- Overview --- p.118 / Chapter 3.3.10.2 --- Attention to Base Rates --- p.119 / Chapter 3.3.10.3 --- Attention to Source Reliability --- p.123 / Chapter 3.3.10.4 --- Insensitivity to Sample Size --- p.127 / Chapter 3.3.10.5 --- Summary for Accounting Research on the Base-Rate Fallacy --- p.129 / Chapter 3.3.11 --- Overconfidence Effect --- p.129 / Chapter 3.3.11.1 --- Appropriateness of Auditors' Confidence --- p.130 / Chapter 3.3.11.2 --- Factors Affecting the Appropriateness of Auditors' Confidence --- p.131 / Chapter 3.4 --- Behavioural Decision Research in Financial Distress Prediction --- p.136 / Chapter 3.4.1 --- Overview --- p.136 / Chapter 3.4.2 --- Prediction Performance --- p.137 / Chapter 3.4.2.1 --- Prediction Accuracy --- p.137 / Chapter 3.4.2.2 --- Appropriateness of Confidence --- p.138 / Chapter 3.4.3 --- Factors Affecting Prediction Performance --- p.139 / Chapter 3.4.3.1 --- Overview --- p.139 / Chapter 3.4.3.2 --- Information Load --- p.139 / Chapter 3.4.3.3 --- Information Cue Choice Versus Weighing of Cues --- p.140 / Chapter 3.4.3.4 --- Base-Rate Information --- p.141 / Chapter 3.4.3.5 --- Task Predictability --- p.144 / Chapter 3.4.3.6 --- Reward Structure --- p.145 / Chapter 3.4.3.7 --- Individual Differences --- p.145 / Chapter 3.4.4 --- Group Judgment Accuracy --- p.146 / Chapter 3.4.5 --- Section Summary --- p.147 / Chapter 3.5 --- Motivation for the Current Study --- p.149 / Chapter 3.5.1 --- Research Opportunity 1 --- p.149 / Chapter 3.5.2 --- Research Opportunity 2 --- p.150 / Chapter 3.5.3 --- Research Opportunity 3 --- p.152 / Chapter 3.5.4 --- Research Opportunity 4 --- p.153 / Chapter 3.6 --- Chapter Summary --- p.154 / Chapter CHAPTER IV --- RESEARCH MODEL AND HYPOTHESES --- p.156 / Chapter 4.1 --- Introduction --- p.156 / Chapter 4.2 --- Research Model --- p.156 / Chapter 4.3 --- Research Hypotheses --- p.158 / Chapter 4.3.1 --- Hypothesis 1 --- p.158 / Chapter 4.3.2 --- Hypothesis 2 --- p.160 / Chapter 4.3.3 --- Hypothesis 3 --- p.163 / Chapter 4.3.4 --- Hypothesis 4 --- p.166 / Chapter 4.3.5 --- Hypothesis 5 --- p.168 / Chapter 4.4 --- Chapter Summary --- p.172 / Chapter CHAPTER V --- RESEARCH METHOD AND DESIGN --- p.173 / Chapter 5.1 --- Introduction --- p.173 / Chapter 5.2 --- Research Method --- p.173 / Chapter 5.3 --- Experimental Design --- p.175 / Chapter 5.4 --- Subjects --- p.177 / Chapter 5.5 --- Construction of the Experiment Instrument --- p.179 / Chapter 5.5.1 --- Selection of Sample Firms for Prediction Tasks --- p.180 / Chapter 5.5.1.1 --- Definition of Firms being in Financial Distress --- p.180 / Chapter 5.5.1.2 --- Identification of Firms in Financial Distress --- p.182 / Chapter 5.5.1.3 --- Selection of Healthy Firms --- p.182 / Chapter 5.5.1.4 --- Sample Firms in the Instrument --- p.183 / Chapter 5.5.2 --- Selection of Financial Ratios --- p.184 / Chapter 5.5.2.1 --- Logit Analysis --- p.185 / Chapter 5.5.2.2 --- Pilot Interviews --- p.187 / Chapter 5.5.2.3 --- Final Financial Ratios Used in the Instrument --- p.188 / Chapter 5.5.3 --- Modification of the Need for Cognition Scale --- p.189 / Chapter 5.5.4 --- Translation of the Experiment Instrument --- p.191 / Chapter 5.5.5 --- Pretest of the Experiment Instrument --- p.191 / Chapter 5.6 --- Administration of Experiment --- p.192 / Chapter 5.7 --- Operationalisation and Measurement of Variables --- p.193 / Chapter 5.7.1 --- Relevance of Base-Rate Information --- p.193 / Chapter 5.7.2 --- Need For Cognition --- p.195 / Chapter 5.7.3 --- Perceived Informativeness of Case-Specific Evidence --- p.197 / Chapter 5.7.4 --- Appropriateness of Confidence --- p.199 / Chapter 5.8 --- Data Analysis Methods --- p.201 / Chapter 5.9 --- Chapter Summary --- p.203 / Chapter CHAPTER VI --- ANALYSIS OF DATA --- p.205 / Chapter 6.1 --- Introduction --- p.205 / Chapter 6.2 --- Descriptive Data about the Subjects --- p.205 / Chapter 6.3 --- Stepwise Logit Analysis --- p.207 / Chapter 6.4 --- Statistical Testing for Hypotheses --- p.210 / Chapter 6.4.1 --- Testing Hypothesis 1 --- p.211 / Chapter 6.4.2 --- Unbalanced ANOVA Model --- p.212 / Chapter 6.4.3 --- Testing the Base Rate Pre-occupied by the Subjects --- p.215 / Chapter 6.4.4 --- Testing Hypothesis 2 --- p.217 / Chapter 6.4.5 --- Testing Hypothesis 3 --- p.218 / Chapter 6.4.6 --- Testing Hypothesis 4 --- p.220 / Chapter 6.4.7 --- Testing Hypothesis 5 --- p.222 / Chapter 6.5 --- Supplementary Statistical Testing of Hypotheses --- p.224 / Chapter 6.5.1 --- Separate Models for Hypotheses 2 to 5 --- p.224 / Chapter 6.5.2 --- Effects of Other Interactions --- p.224 / Chapter 6.5.3 --- Analysing NC As a Continuous Variable --- p.225 / Chapter 6.5.4 --- Repeated Measures ANOVA --- p.226 / Chapter 6.5.5 --- Additional Analysis ´ؤ Controlling for Task Predictability --- p.228 / Chapter 6.6 --- Chapter Summary --- p.232 / Chapter CHAPTER VII --- "SUMMARY, DISCUSSIONS AND IMPLICATIONS" --- p.234 / Chapter 7.1 --- Recap of the Study --- p.234 / Chapter 7.2 --- Conclusions and Discussions --- p.237 / Chapter 7.2.1 --- Hypothesis 1 --- p.237 / Chapter 7.2.2 --- Hypothesis 2 --- p.239 / Chapter 7.2.3 --- Hypothesis 3 --- p.241 / Chapter 7.2.4 --- Hypothesis 4 --- p.243 / Chapter 7.2.5 --- Hypothesis 5 --- p.244 / Chapter 7.2.6 --- Overall Conclusions --- p.246 / Chapter 7.3 --- Implications for Theory --- p.246 / Chapter 7.4 --- Implications for Practice --- p.248 / Chapter 7.5 --- Limitations of the Study --- p.249 / Chapter 7.6 --- Recommendations for Further Research --- p.252 / REFERENCES --- p.254 / APPENDIX A: EXPERIMENT INSTRUMENT (IN ENGLISH) --- p.279 / APPENDIX B: EXPERIMENT INSTRUMENT (IN CHINESE) --- p.306 / APPENDIX C: STEPWISE LOGIT ANALYSIS RESULTS --- p.333

Variable rate mortgages (VRMs) have been introduced into the mortgage market as a means of addressing the housing finance problems encountered over the past two decades. To learn more about the demand for VRMs, this study analyzes borrower choice behavior and its economic determinants. In order to estimate the probability of borrowers choosing VRMs rather than conventional fixed rate mortgages, discrete choice (logit) models are specified and validated for both cross-section and pooled time-series cross-section data samples. These samples contain mortgage application information for the years 1978 through 1981. They were drawn from the Loan Register Report of the California Department of Savings and Loan. The probability of choosing a VRM is estimated as a function of selected price components of the mortgage instrument, borrower characteristics, and economic expectations.