The field of decision making has largely focused on the influence of contextual factors on risk tolerance. Much work has focused on how the problem itself is presented, in hopes of understanding the circumstances under which individuals may be helped in areas of long-term investment and planning through encouragement of greater risk tolerance. Specifically, when making financial decisions, it has been suggested that by presenting individual decisions in groups (Gneezy & Potters, 1997), or by presenting feedback less frequently (Thaler et al, 1997), participants are able to process individual problems in a holistic manner, which encourages risk tolerance when deciding. This literature has typically made claims that these effects are dependent on how the problem is presented. However, evidence for the benefits of “broadly bracketed” problems often relies as much on the presentation of aggregated outcomes as it relies on the grouping of problems. The purpose of this thesis was to further examine whether bracketing effects might be attributable to manipulations of problem framing or outcome framing. In addition, it has been suggested that perhaps individuals who differ in processing styles might respond differentially to framing effects in general (Frederick, 2005). That is, perhaps individuals who are more intuitive decision makers might be more susceptible to context-based changes, and so might show larger framing effects. Deliberative decision makers, on the other hand, might overcome these framing effects by reflecting on, or actively “reframing”, the problem. A secondary purpose of this thesis was thus to investigate individual differences in the magnitude of the bracketing effect on risk tolerance. In Experiment 1, problem and outcome bracketing were examined in the domain of discrete choices, while in Experiment 2, bracketing was examined with continuous iv investments. Results suggest that when investment opportunities are identical, problem framing encourages long-term risk tolerance. However, when choices are somewhat different from one another, as is often the case in real-world investment situations, outcome information is critical to encouraging long-term risk tolerance. Together, results suggest a critical reevaluation of the bracketing hypothesis and its application to long-term investment.

The field of decision making has largely focused on the influence of contextual factors on risk tolerance. Much work has focused on how the problem itself is presented, in hopes of understanding the circumstances under which individuals may be helped in areas of long-term investment and planning through encouragement of greater risk tolerance. Specifically, when making financial decisions, it has been suggested that by presenting individual decisions in groups (Gneezy & Potters, 1997), or by presenting feedback less frequently (Thaler et al, 1997), participants are able to process individual problems in a holistic manner, which encourages risk tolerance when deciding. This literature has typically made claims that these effects are dependent on how the problem is presented. However, evidence for the benefits of “broadly bracketed” problems often relies as much on the presentation of aggregated outcomes as it relies on the grouping of problems. The purpose of this thesis was to further examine whether bracketing effects might be attributable to manipulations of problem framing or outcome framing. In addition, it has been suggested that perhaps individuals who differ in processing styles might respond differentially to framing effects in general (Frederick, 2005). That is, perhaps individuals who are more intuitive decision makers might be more susceptible to context-based changes, and so might show larger framing effects. Deliberative decision makers, on the other hand, might overcome these framing effects by reflecting on, or actively “reframing”, the problem. A secondary purpose of this thesis was thus to investigate individual differences in the magnitude of the bracketing effect on risk tolerance. In Experiment 1, problem and outcome bracketing were examined in the domain of discrete choices, while in Experiment 2, bracketing was examined with continuous iv investments. Results suggest that when investment opportunities are identical, problem framing encourages long-term risk tolerance. However, when choices are somewhat different from one another, as is often the case in real-world investment situations, outcome information is critical to encouraging long-term risk tolerance. Together, results suggest a critical reevaluation of the bracketing hypothesis and its application to long-term investment.

No description available.

The economic development in Sweden in recent years has led to increased financial savings in Swedish households. Financial savings have mostly increased on bank accounts with low interest rates, since private individuals generally have a more cautious position on stocks and stock trading. The reason for this passive position is believed to be due to the fact that decisions that benefit most economically often challenge the feeling of being in control. At the same time, cautious position that a particular individual possess is affected by the risk-tolerance. As a consequence, the risk tolerance of private individuals affects the investment decision and hence the development of the stock market. Savings and investment are two important factors that affect a nation's economic growth, which makes it important to study underlying factors to what affects an individual when making a financial decision. When talking about risk tolerance in everyday life, previous research has revealed that there are four different aspects that affect this complex concept, namely the economic aspect, physical aspect, social aspect and ethical aspect. As investment decisions are affected by financial risk tolerance and the four aspects in turn, affect risk tolerance, the issue becomes how these aspects affect a private investor's financial risk tolerance when investing in stocks. The purpose of this study has been to explain the four aspects of a person’s risk tolerance when investing in stocks. The study has been conducted using a quantitative method and deductive approach. The selection group that the study turned to is Swedish stock investors and the data collection has been done by a survey that was answered by 232 people. The underlying factors for the four aspects tested in the study are income, gender, age, education, marital status and ethical character. The study shows that all four aspects together have a combined impact on private individuals' financial risk tolerance. The study has also shown that all the four aspects, each one separately, are linked to financial risk tolerance, by the underlying factors, income level, gender, marital status and ethical character. / De senaste årens ekonomiska utveckling i Sverige har lett till ett ökat finansiellt sparande i de svenska hushållen. Detta sparande har mestadels ökat på bankkonton med låga räntor då privatpersoner i allmänhet har ett mer försiktigt ställningstagande till aktie och börshandel. Anledningen till detta passiva ställningstagande tros bero på att beslut som gynnar mest ekonomiskt ofta utmanar känslan av att ha kontroll. Samtidigt påverkas ställningstagandet av den risktoleransnivå som en viss individ besitter. Följden av detta blir att privatpersoners risktolerans påverkar investeringsbeslutet och därmed även utvecklingen av aktiemarknaden. Sparande och investering är två viktiga faktorer som påverkar en nations ekonomiska tillväxt vilket gör det viktigt att studera bakomliggande faktorer till vad som påverkar en privatperson när ett finansiellt beslut ska tas. När det pratas om risktolerans i vardagslivet har tidigare forskning delgett att det finns fyra olika aspekter som påverkar detta komplexa begrepp, nämligen den ekonomiska aspekten, fysiska aspekten, sociala aspekten och etiska aspekten. Då investeringsbeslut påverkas av den finansiella risktoleransen och risktoleransen i sin tur påverkas av de fyra aspekterna blir problemfrågan hur dessa aspekter påverkar en privatpersons finansiella risktolerans vid investering i aktier.  Syftet med denna studie har varit att förklara de fyra aspekterna för privatpersoners finansiella risktolerans vid aktieinvestering. Studien har genomförts med hjälp av en kvantitativ metod och deduktiv ansats. Den urvalsgrupp som studien vänt sig till är svenska aktieinvesterare och datainsamlingen har gjorts med hjälp av en enkätundersökning som besvarats av 232 personer.  De bakomliggande faktorerna för de fyra aspekterna som har testats i studien är inkomst, kön, ålder, utbildning, civilstånd och etisk karaktär. Studien visar att alla fyra aspekter tillsammans har sammantagen påverkan på privatpersoners finansiella risktolerans. Studien har även visat att alla de fyra aspekterna har en koppling till den finansiella risktoleransen, var och en för sig, genom de underliggande faktorerna inkomstnivå, kön, civilstånd och etisk karaktär.

The investment management industry has proven to be a fertile ground for theoretical and empirical research over the past forty years, particularly in relation to the nature and quantification of risk. However, the dominance of the U.S. industry has meant that much of the academic research has focused on the U.S. market. This thesis investigates aspects of investment risk using alternative data to that used in much of the prior published research. This thesis contains an extensive analysis of aspects of risk related to both the demand side and the supply side of the managed funds market in Australia. Among the demand side characteristics, attitudes towards risk and their impact on asset allocation decisions will be an important determinant of investors' financial well-being, particularly in retirement. Accordingly, the first part of the thesis examines the financial risk tolerance of investors, exploring the relationship between subjective financial risk tolerance and a range of demographic characteristics that are widely used as a basis for heuristically derived estimates of investors' attitudes towards financial risk. The second part of the thesis contains an analysis of the supply side of the industry, focusing on risk-shifting behavior by investment fund managers. Since the time when performance and risk-shifting behavior of fund managers was first put under the spotlight 40 years ago, it is possible to identify an evolving strand in the research where performance assessment is examined within the framework of the principal-agent literature. One focus that has emerged in this literature is the adaption of the tournament model to the analysis of investment manager behavior, wherein it is hypothesized that fund managers who were interim losers were likely to increase fund volatility in the latter part of the assessment period to a greater extent than interim winners. Against this background, the second part of the thesis examines risk-shifting behavior by Australian fund managers. Both the ability of fund managers to time the market and the applicability of the tournament model of funds management to a segment of the Australian

No description available.

No description available.

No description available.

Doctor of Philosophy / Department of Human Ecology-Personal Financial Planning / Dorothy Durband / D. Elizabeth Kiss / Using constructs derived from expected utility theory and data from the RAND American Life Panel 2012 Well Being 186 and 193 surveys, this study explored the extent to which financial knowledge, financial risk tolerance, and the uncertainty regarding the future need for long-term care were associated with long-term care insurance (LTCI) ownership by baby boomers (N = 1,152). Although extensive studies have been conducted regarding long-term care (LTC) issues facing baby boomers in the United States (U.S.), no studies have been found that investigate whether or not these specific factors were predictive of LTCI ownership by baby boomers. Regression analysis was used to estimate the relationship between the dependent and the independent variables in this study. Consistent with the hypotheses of this study, LTCI knowledge was statistically significantly associated with LTCI ownership by baby boomers. Subjective financial knowledge regarding LTCI had the greatest influence on LTCI ownership. An examination of items used to measure uncertainty regarding the future need of LTC indicated that merely thinking about needing LTC at some point in the future positively influenced LTCI ownership. Baby boomers with higher household income were also more likely to own LTCI. Results of this study may contribute to the existing literature on LTCI ownership among baby boomers. As the need for, and cost of, LTC are expected to increase as the U.S. population ages, study results may also provide information for financial advisors and other stakeholders to better engage baby boomers in ways that promote comprehensive risk management decision making in retirement planning. More specifically, study results may provide stakeholders with information to better understand factors that influence LTCI ownership by baby boomers.

This study models and examines how changes in marketing information affects the degree of investor¡¦s risk aversion, and in turn, influences investor¡¦s decision-makings process under uncertainty. Under the mixed assumptions, the theoretical evidence in this study indicates that cumulative prospect theory (CPT) investors have propensity to discipline their depreciated assets and to sell their appreciated assets. Further, I find that CPT investors have less incentive to sell their holdings with higher advertising than ones with lower advertising when facing a paper gain or a paper loss. The empirical evidence indicates that advertising can help funds stem cash outflows, and finds investors are less willing to sell high performing investments with high fund family advertising than investments with low fund family advertising, and are more reluctant to redeem losing mutual funds with high fund family advertising than funds with low fund family advertising. For loser funds, a possible explanation from this study is that advertising seems to re-enforce the efficacy of recent investor decisions and adjust their beliefs to confirm past decisions, thus lets investors have more incentive to continue holding losing funds. For winner funds, this study infers that advertising may signal product quality, increase consumer satisfaction, brand equity and consumer loyalty that lead investors satisfied with their past decisions to have a greater propensity to retain their winning investments.