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The thesis compared the likelihood of taking risks in dyads and individuals in varying situations. Patterns of risky decision making were examined in the standard risky choice task and a novel risk management task. The relative successes of two theories of risky decision making were assessed: Prospect Theory emphasizes perceptual and psychophysical processes, whereas Security-Potential/Aspiration Level Theory emphasizes dispositional and motivational processes. The thesis also examined dyads’ decision behavior in light of competing social influence perspectives regarding risky versus cautious shifts and group polarization. Participants, as individuals or as part of a dyad, made decisions in 23 trials about hypothetical two-outcome monetary gambles in one of two different tasks. Risky choice involved making choices between two given 50-50 lotteries which varied in riskiness (i.e., outcome variability), whereas risk management required actively manipulating an existing 50-50 risk by changing outcome values. The 23 trials were equivalent across tasks. Dyad participants communicated via an instant messenger program, while viewing the same lotteries on different computers. Data on risk preferences across gain and loss domains were analyzed using a mixed factorial ANOVA design. Consistent with Prospect Theory value function predictions, the risky choice task led to risk averse preferences for gains and risk seeking preferences for losses, though risk seeking was weak. Consistent with SP/A theory predictions, the risk management task led to overall risk averse preferences, with movement toward risk taking for gains. In addition, there was some evidence of social influences in that dyads tended to be more conservative than individuals in their decision behavior when dealing with undesirable outcomes. Thus, a cautious shift was observed, but only for lotteries involving guaranteed losses. This could not be explained by group polarization.  Each of the theories received some support, but none of them could explain all of the findings. Recommendations were made to give greater attention to defining and measuring risk attitudes and dispositions, and to continue exploring differences in decision situations and social settings to obtain a more comprehensive understanding of risky decision making processes. Findings here suggest the need for an overarching theory that can account for a wide variety of influences. A dual processes approach was recommended as one promising avenue. Social and situational influences may prove an essential part of understanding risky decision making in real life contexts.

A recent debate has identified a description– experience gap, where the non-linear weighting function identified in prospect theory reverses when probabilities are discovered through experience rather than by description (probabilities). This thesis will explore the role of experience and probabilities theoretically and empirically. It is argued that both behaviors are compatible on a theoretical basis given a preference for the status quo, but produce opposing decision weights due to different cognitive and motivational factors. Probabilities focus a decision on the potential for rare events creating a preference for certain outcomes and reduced risk taking consistent with loss aversion. Experience overweighs customary outcomes consistent with sensitivity to a reference point or the status quo. Experience in the form of loss, however, moderates the effect of probabilities on risk taking. An experimental game of dice supports this hypothesis, suggesting ambiguity seeking in the face of loss and raising the possibility that the use of probabilities may not be always be maximizing behavior.

We live in an era where internationalization and globalization are two extremely attractive concepts. People aim to create a society where limits and restrictions are erased and a thriving society is a reality. Numerous transformations have occurred in order to realize this and one of the most vital ones is the globalization of the economy. The globalization was made possible through the discovery on the capital market. This market enables people to trade with each other, no matter place or time. Thus, a more efficient solution is offered for rapid and significant transfers such as loans and investment. According to various researchers, the capital market determines, in a way, which company will grow and which will stagnate in development. However, the capital market needs to be efficient in order to offer the services intended. The aim of this dissertation is to explain how efficient the capital market is when incorporating information regarding football player transfers. By examining the empirical findings, it will also be able to establish if assets of the same market value cause different share price fluctuations depending on if they are acquired or sold.

In many areas of Artificial Intelligence (AI), we are interested in helping people make better decisions. This help can result in two advantages. First, computers can process large amounts of data and perform quick calculations, leading to better decisions. Second, if a user does not have to think about some decisions, they have more time to focus on other things they find important. Since users' preferences are private, in order to make intelligent decisions, we need to elicit an accurate model of the users' preferences for different outcomes. We are specifically interested in outcomes involving a degree of risk or uncertainty. A common goal in AI preference elicitation is minimizing regret, or loss of utility. We are often interested in minimax regret, or minimizing the worst-case regret. This thesis examines three important aspects of preference elicitation and minimax regret. First, the standard elicitation process in AI assumes users' preferences follow the axioms of Expected Utility Theory (EUT). However, there is strong evidence from psychology that people may systematically deviate from EUT. Cumulative prospect theory (CPT) is an alternative model to expected utility theory which has been shown empirically to better explain humans' decision-making in risky settings. We show that the standard elicitation process can be incompatible with CPT. We develop a new elicitation process that is compatible with both CPT and minimax regret. Second, since minimax regret focuses on the worst-case regret, minimax regret is often an overly cautious estimate of the actual regret. As a result, using minimax regret can often create an unnecessarily long elicitation process. We create a new measure of regret that can be a more accurate estimate of the actual regret. Our measurement of regret is especially well suited for eliciting preferences from multiple users. Finally, we examine issues of multiattribute preferences. Multiattribute preferences provide a natural way for people to reason about preferences. Unfortunately, in the worst-case, the complexity of a user's preferences grows exponentially with respect to the number of attributes. Several models have been proposed to help create compact representations of multiattribute preferences. We compare both the worst-case and average-case relative compactness.

Hochsch. für Wirtschafts-, Rechts- und Sozialwiss., Diss.--St. Gallen, 2007.

Univ., Diss.--Halle, 2004. / Auch im Internet unter der Adresse http://www.dissertation.de verfügbar.

Pain has a significant burden on individuals and society; however challenges remain in the measurement of pain-related utility. Research was conducted to design a measurement framework for valuing pain states, for use in policy making. Within the theoretical framework of utility theory, the bio-psychosocial model of pain was used to select co-variates impacting the pain-utility relationship. The applicability of two utility theories (prospect theory and hedonist theory) to pain was evaluated, with EQ-5D-5L and utility values for scenarios of different pain intensities elicited using time-trade-off (TTO) and willingness-to-pay (WTP). Prospect theory was tested using the pain-utility relationship in 600 members of the general population (‘genpop’) by examining the presence of a reference point and the relationship between pain decreases/increases (gains/losses) and utility. Hedonist theory was tested through examination of predicted, experienced and remembered utilities, and ‘peak-end’ effects, principally using data from 56 university athletes experiencing training pain. Pain intensity had the greatest influence on EQ-5D values, with present and worst pain showing additive effects. Duration of the pain episode, general health, mood, age and gender also had significant impacts. In addition to pain intensity, TTO ‘genpop’ models included age, income, experienced pain and general health; WTP ‘genpop’ models included residual pain, age and income. The TTO and WTP models did not fit the athletes’ data well and alternative models were developed. The data did not confirm prospect theory: a reference point could not be identified (‘genpop’ and athletes) and the shape of the utility curve contradicted theory (athletes). Results for hedonist theory were inconclusive: predicted utility was consistently higher than experienced utility in athletes but the relationship depended on pain levels in ‘genpop’; remembered and experienced utility differed despite being consistent for pain levels; peak-end effects were not found. Further research in controlled environments is recommended for further theory testing.

abstract: This thesis presents a model for the buying behavior of consumers in a technology market. In this model, a potential consumer is not perfectly rational, but exhibits bounded rationality following the axioms of prospect theory: reference dependence, diminishing returns and loss sensitivity. To evaluate the products on different criteria, the analytic hierarchy process is used, which allows for relative comparisons. The analytic hierarchy process proposes that when making a choice between several alternatives, one should measure the products by comparing them relative to each other. This allows the user to put numbers to subjective criteria. Additionally, evidence suggests that a consumer will often consider not only their own evaluation of a product, but also the choices of other consumers. Thus, the model in this paper applies prospect theory to products with multiple attributes using word of mouth as a criteria in the evaluation. / Dissertation/Thesis / Masters Thesis Applied Mathematics 2014

Risk is something intrinsic to business, and something firms are exposed to on a daily basis. This means that there exists a great deal of pressure on the Top Management of a firm to successfully navigate the different risks to which they are exposed. The CEO holds a unique position in the firm, as she is ultimately responsible for deciding which strategies to employ in order to properly respond to these risks. But what influenced the CEO when making such decisions? The Upper Echelon Theory suggests that decisions made by the Top Management Team of a firm are influenced by their values and their cognitive base, which is formed throughout their upbringing. Researchers on Upper Echelon Theory suggest that these two abstract constructs can be difficult to measure and analyse, and should therefore be approximated using specific and observable characteristics of the Top Management Team. In our study, this theory has applied to Swedish CEOs as they are the ultimate decision-maker in a firm. The specific characteristics observed and analysed in our investigation into the relationship between the CEO and risk are; gender, age, nationality, and tenure. Thus, the purpose of this study is formulated as follows: “The purpose of this study is to investigate the relationship between CEO characteristics, specifically age, gender, tenure, and nationality, and firm risk-taking, as measured by the leverage ratio, stock return volatility, cash holdings, and R&D expenditure, on the Swedish market. As a sub-purpose, we intend to investigate whether there is a nonlinear relationship between CEO tenure and risk-taking.” By collecting data from the databases, Thomson Reuters Eikon and Amadeus, a dataset of 284 firms and their CEOs was collected and used in the cross-sectional analysis. Multiple linear regression analysis was employed to determine the relationships between the previously mentioned CEO characteristics and the proxies for firm risk-taking. The majority of the relationships found were of a non-significant nature, indicating that the relationship between Swedish CEO characteristics and the strategies they employ when running their firms is weak and differs from relationships found in earlier studies, using data from different markets. The significant relationships found were between cash holdings and age, long tenures and leverage ratio, and short tenures and stock return volatility. This indicates that older CEOs are more risk-averse, while longer seated CEOs maintain less debt, and shorter seated CEOs are perceived as more risky by the market. However, as these results only entail 15% of our observed results, none of the hypotheses constructed for this study were verified. Therefore, our conclusion is that the previously observed relationships between the characteristics of CEOs and their risk-taking is not present within our sample of firms listed on the Swedish market. Some tendencies that align with previous results have been found but are not generalisable and as a result, we cannot recommend that private actors act on these results.