This paper is a study how students at a high school in Falun, Sweden, estimates their performance in an upcoming math test which is then compared with the actual grade the student performed. The students who participated also answered questions related to “risk situations” to examine whether there is a correlation between how students estimate their performance in the context and their risk behavior, and if the students act like economic models assume. In agreement with previous studies, the boys in the survey tended to be overconfident in their performance. The girls in the study were neither over- nor underconfident in her performance and no significant difference in the estimation of one's performance between the sexes could be proven. The proportion of boys who considered themselves to take greater risk than class average was greater than the proportion of girls in the question. No linear relationship between estimation of performance and risk behavior or differences in risk behavior could be found between the sexes.

Název / Title Eseje o rozhodování pod stresem / Essays on Decision Making under Stress Student PhDr. Lubomír Cingl Studijní program / Study program Ekonomické teorie Školitel / Advisor PhDr. Michal Bauer, Ph.D. Abstract This dissertation comprises three thematically connected experimental studies of human behavior under non- standard conditions: time-pressure and stress. In the Introduction section I present the argument for why it is important for economists to recognize stress research as a valid part of the research in economics and how it can contribute to the growing knowledge of human behavior in general, including several examples from the literature. The first paper presented in Chapter 2 examines the effect of time pressure on the individual propensity to herd, while the remaining two papers examine the effect of acute stress on risk-preferences and herding behavior, respectively. Herding behavior is a very important phenomenon in human decision making since social influence is very frequent in our lives and economic decisions: consider traders in financial markets, wait-and-see investors, but also purchase behavior due to fads, fashion and top-ten lists. Risk preferences are another essential factor which determines many important economic outcomes, and the assumption of their stability is a...

CoordenaÃÃo de AperfeÃoamento de Pessoal de NÃvel Superior / A teoria da busca por emprego prediz que indivÃduos mais avessos ao risco possuem salÃrios de reserva menores que indivÃduos menos avessos ao risco e, por conseguinte, teriam uma menor probabilidade em estarem desempregados (PISSARIDES, 1974; NACHMAN, 1975; LIPPMAN e McCALL, 1976). EvidÃncias empÃricas para esta hipÃtese, no entanto, sÃo bastante escassas nos mercados de trabalho de paÃses desenvolvidos e praticamente inexistente em paÃses com mercados caracterizados por um alto grau de informalidade. Este trabalho tem por objetivo averiguar esta teoria neste Ãltimo contexto, e mais especificamente para o mercado de Fortaleza-CE (Brasil), utilizando para isso uma base de dados que contÃm informaÃÃes de mercado de trabalho, juntamente com indicadores de comportamento de risco dos indivÃduos. A partir desta base de dados, classificaram-se os indivÃduos quanto à aversÃo ao risco, realizaram-se estimativas de probabilidade de desemprego a partir de modelos Logit, e encontraram-se resultados condizentes com a teoria, principalmente quando se compara indivÃduos nesta condiÃÃo com aqueles no mercado informal. / The job search theory predicts that more risk averse individuals have lower wages than less risk-averse individuals booking and therefore would be less likely to be unemployed (PISSARIDES, 1974; NACHMAN, 1975; LIPPMAN and McCALL, 1976). Empirical evidence for this hypothesis, however, are quite scarce in labor in developed and practically nonexistent in countries with markets characterized by a high degree of informality country markets. This paper aims to investigate this theory in the latter context, and more specifically for the market of Fortaleza, CE (Brazil), using for this purpose a database containing information of the labor market, along with indicators of risk behavior of individuals . From this database, classified themselves as individuals to risk aversion, there were estimates of the probability of unemployment from logit models, and met results consistent with the theory, especially when comparing individuals with this condition those in the informal market.

In this thesis I present three papers on the Economics of the base metals industry. The thesis studies production, trading, and investment in the base metals industry, and thus explains some phenomena of the industry in an international context. Using the features of the base metals industry such as the practices in production and trading, physical properties, geology of the deposits and so on, we build theoretical models to simulate the behavior of the industry. In Chapter One, we study the determinants and the trend of base metals prices over time by an equilibrium model of supply and demand. Because the different types of natural resources exhibit different patterns of price changes in history, we particularly simulate the long run equilibrium to study the impacts of the determinants for base metals prices. The Cobb-Douglass production function on the supply side allows substitution among production factors. The demand function for base metals from the economy is also derived. In the long run, equilibrium of aggregate supply and demand determines the systematic price trend. We show how trends of base metals prices depend on technological progress, resource scarcity, natural resource tax, and the interest rate. Assuming constant returns to scale in base metals production, the price elasticity of the supply of base metals is relatively small. Interestingly, a high natural resource tax leads to a high price but low rate of price change over time. On the supply side, the decline of base metals relative prices can thus be explained by the inverse supply functions. On the demand side, the relative price is also declining over time as we see the implications of the inverse demand functions and our numerical illustrations. By solving the equilibrium condition, we show that the economic rent of base metals minerals in reserve may decline over time, or even not be valuable in future. The price elasticities of supply and demand are calculated and decomposed into specific effects. These are systematic components of base metal price changes in the world market. Chapter Two deals with the fluctuations in the prices of base metals. We consider the price in the short run as an equilibrium of trade. If the long run equilibrium regulates the prices and sets them in a stabilization, then the fluctuations in price are caused by the trade and speculative activities. By simulating speculative activities and optimizing the utility of agents in international exchanges, we show that the price fluctuations are the response to risk preferences of agents and the scale of international exchanges. We find out the critical point of production investment, which depends on the market demand, profitability of the metal industry, and the distribution of base metal minerals in nature. In the specific case of the industry versus the market condition when the uncertain production is above the critical point, the price of base metal fluctuates more or less according to the number of producer offers in base metal exchanges, the speculative activities, and risk preferences of agents. In contrast, if the investment level of the base metals industry in uncertain production is below the critical point, the effects of base metal exchanges scale to the price are in the reverse direction. The comparative statics inequalities are derived to clarify the responses of the price to the risk preferences of agents and scale of the international exchanges. Hence, the non-systematic changes of base metals prices in international exchanges are explained. Chapter Three studies the impact of the industrial and commercial processes on investment decisions in the base metals industry. The investment decisions of investors in the primary capital market and the stock price in the secondary capital market reflect properties of the base metals industry in capital markets. We present a model of investments, which is a two stage game that incorporates Hall-Jorgenson neoclassical investment analysis and properties of the base metals industry. The paper presents a set of explanatory parameters for the properties of base metal stocks and analyzes the investment decisions. We define the industry factor and explain the empirical observations on the beta coefficient of base metal stocks. The relationships between stock prices and base metals prices are clarified using the geology of base metals deposits. The results show that there is a strong impact of the industry factor on the volatility of base metal stock prices. Economies of scale in the mining industry lead to different effects of tax policy and output prices on investment decisions. We support conclusions of the model by evidence in the base metals industry. There are policy implications that are derived from the equations of the optimal investment. Key words : Base Metals, Price Fluctuations, Price Trends, Risk Aversion, Metals Industry, LME, International Exchange, Metal Stocks, Investment.

We re-examine the classic problem of risk aversion and self-protection in this paper. In the beginning of this paper, we conduct comparative statics of risk aversion and prevention efforts based on the mono-periodic two states model of choice under risk. We show this new condition is effective with self-insurance-cum-protection model (Lee, 1998), in which the decision maker's activities to prevent the risk can sever both as self-insurance and self-protection. We suggest a new condition that increased risk aversion induces more prevention activities. This new condition requires only one assumption concerning fear of ruin coefficient, marginal effect of SICP activity on probability and marginal cost of SICP activity. By applying interval dominance order (Quah and Strulovici,2009), we find that a decision maker will exert higher level of SICP activity if he becomes more risk averse, under the condition that his hazard rate is higher than the 'boldness' coefficient (Aumann and Kurz,1977). This new condition is effective even when the optimal level for SICP activity is not interior solution. With our method, the assumption, that optimal solution is interior, is not necessary and marginal utility functions do not need to be monotonic on the interval [0, w0]. Based on this, the optimal solution can be corner solution or inflection point solution. And the DM's attitude towards risk can be variable. Hence, the relation suggested by our findings is more consistent with real world situations.

My thesis focuses on the risk-taking behavior of financial agents, aiming particularlyat better understanding how risk attitudes can change over time. It alsoexplores the implications that these changes have on financial markets, and on theeconomy as a whole.The first paper, which is a joint work with Kim Oosterlinck and Andrey Ukhov,studies how risk aversion of financial markets’ participants is affected by the SecondWorld War. The literature links extreme events to changes in risk aversion but failsto find a consensus on the direction of this change. Moreover, due to data limitationsand difficulties in estimation of risk aversion, the speed of the change in risk aversionhas seldom been analyzed. This paper develops an original methodology to overcomethe latter limitation. To estimate changes in attitude toward risk, we rely on thedaily market prices of lottery bonds issued by Belgium. We provide evidence on thedynamic of risk attitude before, during and after the Second World War. We findsubstantial variations between 1938 and 1946. Risk aversion increased at the outbreakof the war, decreased dramatically during the occupation to increase again afterthe war. To our knowledge, this finding of reversal in risk attitude is unique in theliterature. We discuss several potential explanations to this pattern, namely changesin economic perspectives, mood, prospect theory, and background risk. While theymight all have played a role, we argue that habituation to background risk mostconsistently explains the observed behavior over the whole period. Living continuouslyexposed to war-related risks has gradually changed the risk-taking behavior ofinvestors.In the second paper, I derive a measure of risk aversion from asset prices andanalyze what are its main drivers. Given the complexity of eliciting risk aversionfrom asset prices, few papers provide empirical evidence on the dynamics of riskaversion in a long-term perspective. This paper tries to fill the gap. First, I providea measure of risk aversion that is original, both because of the length of its sampleperiod (1958- 1991) and the methodology used. I study the relationship betweenthis new measure of risk aversion and several key economic variables in a structuralvector autoregression. Results show that risk aversion varies over the period. Aworsening of economic conditions, a decrease in stock prices or a tighter monetarypolicy lead to an increase in risk aversion. On the other hand, an increase in riskaversion is linked to a larger corporate bond credit spread and has an adverse effecton stock prices.The third paper explores the impact of asset price bubbles on the riskiness offinancial institutions. I investigate the effect of a real estate boom on the financialstability of commercial banks in the United States using exogenous variations intheir exposure to real estate prices. I find that the direction of the effect dependson bank characteristics. Although higher real estate prices have a positive impacton bank stability on average, small banks and banks that operate in competitivebanking markets experience a negative effect. I reconcile these findings by providingevidence that higher real estate prices benefit commercial banks by raising the valueof collateral pledged by borrowers but at the cost of an increase in local bankingcompetition. This increase in competition affects banks that have a low marketpower more severely, which explains why small banks and banks facing a high degreeof competition display relatively lower stability during a real estate boom. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

Previous research has shown that there is a negative relationship between female elected officials and corruption in democracies. Especially in high accountability settings where corruption is stigmatized, it makes female elected officials more risk averse as a result of higher probability of being held accountable. Through a quantitative approach, this thesis examines the relationship of gender and corruption on the individual level in Swedish municipalities. To investigate if there are any differences in attitudes towards corruption among female and male local politicians, and what might cause that difference, a survey answered by local politicians from all the 290 municipalities in Sweden was used. The results showed that there is a difference in attitudes towards corruption, female local politicians seem to be more negative than their male counterparts. Female local politicians also seem to become even more negative in their attitudes towards corruption if the accountability is higher. The explanation could be that female local politicians are more risk averse than male local politicians in Swedish local councils, as the same attitude could not be found for them. However, these findings cannot exclude that other explanations can be important for the relationship between gender and attitudes towards corruption. Nevertheless, this thesis gives a starting point for further research of the connection between the individual level of attitudes towards corruption, gender and accountability in Swedish municipalities.

This research presents a bi-level stochastic network interdiction model on an attack graph to enable a risk-averse resource constrained cyber network defender to optimally deploy security countermeasures to protect against attackers having an uncertain budget. This risk-averse conditional-value-at-risk model minimizes a weighted sum of the expected maximum loss over all scenarios and the expected maximum loss from the most damaging attack scenarios. We develop an exact algorithm to solve our model as well as several acceleration techniques to improve the computational efficiency. Computational experiments demonstrate that the application of all the acceleration techniques reduces the average computation time of the basic algorithm by 71% for 100-node graphs. Using metrics called mean-risk value of stochastic solution and value of risk-aversion, numerical results suggest that our stochastic risk-averse model significantly outperforms deterministic and risk-neutral models when 1) the distribution of attacker budget is heavy-right-tailed and 2) the defender is highly risk-averse.

Previous studies have underscored the economic importance of the role of the entrepreneur, and empirical studies testing the nature of the entrepreneur are notably lacking. This study directly addresses this issue by examining newly gathered field data which captures the decision making and risk behaviors for a group of high-technology entrepreneurs. Two decision making tasks were used to elicit risk aversion measures and to test for any 'joy of winning' or judgmental errors, possibly in the form of over optimistic behavior. These elicitations were made with the use of multiple price formats and winner's curse experiments. 62 responses were collected from subjects at the 2004 national Small Business Innovation Research (SBIR) conference in Atlanta, March 2004. From these 62 responses a subject pool of 33 entrepreneurs and 29 non-entrepreneurs were identified. Statistical methods were employed to assign risk aversion measures and identify any 'joy of winning' or judgmental errors for the entrepreneur (treatment) group compared with the non-entrepreneur (control) group. Findings show that entrepreneurs exhibit less risk aversion, but show no statistically meaningful difference in judgmental errors compared to their non-entrepreneur counterparts. However, there is evidence to support the claim that both entrepreneurs and non-entrepreneurs exhibit a 'joy of winning', and that the size of the effect is larger for entrepreneurs.

[pt] Este artigo estuda disparidades de gênero no desempenho e na aversão ao risco sob competição. Utilizamos dados do Exame Anpec, exame de seleção nacional de candidatos aos cursos de mestrado (e doutorado) em Economia no Brasil. Este exame específico atribui pontos negativos a respostas incorretas, o que pode fazer com que os alunos mais avessos ao risco deixem mais perguntas sem resposta e possivelmente obtenham notas mais baixas. Mostramos que as mulheres tendem a omitir mais perguntas em comparação com os homens e estão consistentemente sub-representadas no topo dos rankings. Utilizando o Modelo Rasch derivamos probabilidades de cada aluno responder cada questão corretamente e mostramos que tanto homens como mulheres se desviam da estratégia ótima que maximiza a nota esperada. Investigamos também o cenário onde todos os alunos chutam as questões anteriormente deixadas em branco, após recalcular as notas esperadas e novas classificações neste cenário mostramos que em média o efeito para as mulheres que já estavam no topo da distribuição é muito pequeno, e as mulheres que estavam com classificação mais baixa se beneficiam mais. / [en] This paper studies gender disparities in performance and risk aversion under competition. We use data from the Anpec Exam, the Brazilian national exam for students applying for Graduate Programs in Economics. This particular exam assigns negative points to incorrect answers, which could lead to the more risk-averse students leaving more questions unanswered and possibly getting lower grades. We show that women tend to omit more questions compared to men and are consistently under represented at the top of the rankings. Using the Rasch Model we derive probabilities of answering each question correctly for each student and show that both men and women deviate from the optimal strategy that maximizes their expected score. We also investigate the scenario where all students guess the questions previously left unanswered, after recalculating the expected scores and new rankings in this scenario we find that on average the effect for women that were already at the top of the distribution is very small, and women that were closer to the bottom of the ranking benefit more.