Thesis (Ph. D.)--University of Texas at Austin, 2003. / Vita. Includes bibliographical references. Available also from UMI Company.

Thesis (Ph. D.)--University of Texas at Austin, 2007. / Vita. Includes bibliographical references.

The research presented in this thesis considers the question of whether individual-level risk preferences are consistent or inconsistent across decision domains. For example, do people make the same decisions with respect to work, health and finance? Some previous authors have suggested that risk preferences are inconsistent, e. g. Kahneman and Tversky (1979), while others have put forward the idea that people have generalised tendencies to take or avoid risks, e. g. Sitkin and Pablo (1992). The work of Sitkin and Pablo was drawn upon to develop hypotheses concerning the conceptualisation and construction of risk propensity. Risk propensity was operationalised as the degree of consistency of cross-domain risk preferences. It was proposed that a propensity to take or avoid risks is associated with whether individuals have consistent tendencies across different decision domains, that personality will be a key predictor of risk propensity, and that inconsistent cross-domain risk preferences will be associated with risk domain-specific cognitive and emotional aspects of decision making. A survey measure was developed to assess risk and decision preferences both across and within the domains of work, health and finance. Biographical and personality factors were also measured. The sample comprised 360 participants drawn from five sample groups chosen to capture a range of risk preferences. The results showed that risk propensity can be conceptualised and measured in terms of the consistency of cross-domain risk preferences. People who were consistent in their risk preferences were characterised by the personality traits of emotional stability, low extroversion, low openness and high agreeableness. Additionally, consistent risk preferences were associated with relative consistency of attention to situational information and perceived risk. The majority of participants, however, had different risk preferences in different domains, and showed variability in their decision preferences. The implications of the research for understanding risk propensity and risk management are discussed.

The development of suitable long term flood risk intervention strategies is a challenge. Climate change alone is a significant complication but in addition complexities exist trying to identify the most appropriate set of interventions, the area with the highest economical benefit and the most opportune time for implementation. All of these elements pose difficulties to decision makers. Recently, there has been a shift in the current practice for appraising potential strategies and consideration is now being given to ensure flexible, adaptive strategies to account for the uncertain climatic conditions. Real Options in particular is becoming an acknowledged approach to account for the future uncertainties inherent in a flood risk investment decision. Real Options facilitates adaptive strategies as it enables the value of flexibility to be explicitly included within the decision making process. Opportunities are provided for the decision maker to modify and update investments when knowledge of the future state comes to light. In this thesis the use of Real Options in flood risk management is investigated as a method to account for the uncertainties of climate change. Each Intervention strategy is purposely designed to capture a level of flexibility and have the ability to adapt in the future if required. A state of the art flood risk analysis tool is employed to evaluate the risk associated to each strategy over future points in time. In addition to Real Options, this thesis also explores the use of evolutionary optimisation algorithms to aid the decision making process when identifying the most appropriate long term strategies. Although the risk analysis tool is capable of quantifying the potential benefits attributed to a strategy, it is not necessarily able to identify the most appropriate. Methods are required which can search for the optimal solutions according to a range of performance metrics. Single and multi-objective genetic algorithms are investigated in this thesis as a method to search for the most appropriate long term intervention strategies. The Real Options concepts are combined with the evolutionary multiobjective optimisation algorithm to create a decision support methodology which is capable of searching for the most appropriate long term economical yet robust intervention strategies which are flexible to future change. The methodology is applied to two individual case studies, a section of the Thames Estuary and an area on the River Dodder. The results show the inclusion of flexibility is advantageous while the outputs provide decision makers with supplementary knowledge which previously has not been considered.

Flood events have caused detrimental impacts to humans' lives and anthropogenic climate change is anticipated to exacerbate the impact. It has been recognized that a long-term planning through risk-based optimization of flood defence will lead to a cost-effective solution for managing flood risk, but the prevailing assumption of stationarity may lead to an erroneous solution. In attempt to investigate the potential impact of the uncertain underlying statistical characteristics of extreme flow series to flood protection decisions, this research explores risk-based flood protection decisions in the context of climatic variability and change. In particular, the implications of persistence series and nonstationarity were investigated through hypothetical and real case studies. Monte Carlo simulation approach was adopted to capture the uncertainty due to the natural variability. For persistence model, AR(1) was integrated with the GEV model to simulate extreme flow series with persistence. To test the effects of nonstationary, GEV models with a linear location parameter and time as covariate were adopted. Rational decision makers' behaviours were simulated through a designed decision analysis framework. One of the main findings from the research is that the traditional stationary assumption should remain the basic assumption due to insignificant difference of the decisions' economic performance. However, exploration of the nonstationarity assumption enabled identification of options that are robust to climate uncertainties. It is also found that optimized protection of combined measures of flood defence and property-level protection may provide a cost-effective solution for local flood protection. Overall, the simulation and case studies enlighten practitioners and decision makers with new evidence, and may guide to practical enhancement of long term flood risk management decision making.

The main aim of this research is to develop a conceptual model that describes the way managers make decisions about internationalizing. It also tries to explain under what conditions managers will be risk-seekers and under what conditions they will be risk-averse, and as a result which groups of strategies and tools they will choose to use when internationalizing. This investigation focuses on the field of behavioural economics in opposition to leading paradigms in the IB field that concentrate on the neoclassical economic theory. This research uses an interdisciplinary approach that combines the behavioural economics approach and theories drawn from the field of entrepreneurship, IB, market relations, industrial organization, RBV and institutional theory, in order to develop a comprehensive theoretical framework that can explain from the senior manager's perspective when and why s/he chooses certain variables and not others. The findings link the manager's perception of his position vis-à-vis his industry reference point (IRP are defined as any variable that highlights a particular objective, seems capable of establishing a reference point, and as a result, creates a framework for organizational/individual decision making) and his decision making in the area of risk management, learning, and product adaption and development. The findings indicate that managers below their IRP display innovation when developing new marketing/distribution channels, and share their knowledge with partners. Nevertheless, they demonstrate low awareness of risk management. In contrast, managers above their IRP focus on the organization's existing technology and marketing and distribution channels and avoid adjusting their products to the market needs and sharing knowledge with distributors. On the other hand, they adopt an active risk management strategy.Additionally we link between the manager's perceptions of his position vis-à-vis his IRP and his choice of entry mode strategy. The findings indicate that a number of differences exist between managers below their IRP and managers above their IRP. Managers below their IRP use positioning strategies but use TCA or institutional strategies very little. In contrast, managers above their IRP use TCA or institutional strategies but will hardly use positioning strategies at all. The two types of managers use network strategy and RBV, but each group uses different factors within the theories. The research makes a number of important contributions to study of the IB sphere, particularly to the fields of research relating to the internationalization of BG companies, which is a relatively new field of knowledge. Today there is no comprehensive theoretical framework explaining the way BG companies internationalize and the reasons they choose one strategy or tool over another when entering foreign markets. The present research attempts to establish a conceptual model that describes the way managers make internationalization decisions. It does so by importing a new discipline from the field of behavioural economics into the IB field, which is deeply wedded to the tradition of neo-classical economics and integrates it with existing strategies in the field to create a conceptual model that mediates between traditional IB research and the BG research stream.

The South African (SA) sugar industry supports approximately 50,940 small and large scale producers who collectively produce 22 million tons of sugarcane seasonally, on average. SA farmers face many challenges that lead to an uncertain decision making environment. Despite a general consensus among agricultural economists that risk constitutes a prevalent feature of the production and marketing environment, various authors have recently stated that risk-related research has failed to provide a convincing argument that risk matters in farmers' decisions. The various shortcomings of previous research have been identified and recommendations for the future proposed. Recommendations include that the focus of future risk research should be on holistic risk management. This study firstly identified the perceived importance of 14 separate sources of risk for a sample of 76 large-scale commercial sugarcane farmers in KwaZulu-Natal. Once a sufficient understanding of the risk perceptions of respondents had been attained, their use of 12 risk-related management strategies was determined. Principal components analysis (PCA) was used to investigate how individual management instruments are grouped together by respondents into choice brackets in order to make use of complementary and substitution effects. The study then proposed and demonstrated a technique that may be used in future research to isolate the effects of risk on individual risk-related management responses by modelling the management strategies contained within individual choice brackets with two-stage least squares regression analysis (2SLS). The most important risk sources were found to be the threats posed by land reform, minimum wage legislation and the variability of the sugar price, in that order. PCA identified seven risk dimensions, collectively explaining 78% of the variance in all 14 risk sources considered. These dimensions were: the "Crop Gross Income Index", "Macroeconomic and Political Index", "Legislation Index", "Labour and Inputs Index", "Human Capital and Credit Access Index", "Management Index" and the "Water Rights Index". Respondents were also asked questions regarding risk-related management strategies, including diversification of on-farm enterprises, investments and management time. PCA identified six management response brackets, collectively explaining 77% of the variance in the 12 responses considered. These response indexes were: the "Mechanisation and Management Bracket", "Enterprise and Time Diversification Bracket", "Insurance and Credit Reserve Bracket", "Geographic and Investment Diversification Bracket", "Land Trade Bracket" and the "Labour Bracket". Lastly, the study proposed a methodology for investigating the role of individuals' risk preferences in decision making. The recommended technique involves the simultaneous modelling of the major risk-related management strategies within each management response bracket, using 2SLS. A measure of risk preference was included in the 2SLS analysis to establish the influence of risk on decision making. By applying this methodology to the data obtained in this study, respondents were shown to be taking advantage of various complementary and substitution effects that exist between management responses. This was evident from the PCA and confirmed for the first previously identified management response bracket using 2SLS regression analysis. Risk attitude was shown to be a significant determinant of management decisions regarding the extent to which back-up management is kept in reserve. Important policy recommendations stemming from this study include that government review restrictive labour legislation and decrease the uncertainty surrounding new land redistribution legislation. Farmers need to make better use of available information by considering the effects of any single management decision on separate decisions, enabling them to take further advantage of substitution and complementary effects that may exist between management strategies previously considered in separate decision brackets. The fact that mechanisation and labour use occur in separate risk-related management response brackets in this study is an example of one such substitution effect that farmers do not seem to be utilising in terms of their management decision making. Future research using time series data is important in order to identify how risk perceptions and management portfolios change over time. Also, further research using the methodology proposed in this study may prove to be a useful means of more adequately addressing the question "Does risk matter in farmers' decisions?" / Thesis (M.Sc.)-University of KwaZulu-Natal, Pietermaritzburg, 2007.