Assessing individual risk attitudes using field data from lottery games

We use information from the television game show with the highest guaranteed average payoff in the United States, Hoosier Millionaire, to analyze risktaking in a high-stakes experiment. We characterize gambling decisions under alternative assumptions about contestant behavior and preferences, and derive testable restrictions on individual risk attitudes based on this characterization. We then use an extensive sample of gambling decisions to estimate distributions of risk-aversion parameters consistent with the theoretical restrictions and revealed preferences. We find that although most contestants display risk-averse preferences, the extent of the risk aversion implied by our estimates varies substantially with the stakes involved in the different decisions.

Chimpanzees and bonobos distinguish between risk and ambiguity.

Although recent research has investigated animal decision-making under risk, little is known about how animals choose under conditions of ambiguity when they lack information about the available alternatives. Many models of choice behaviour assume that ambiguity does not impact decision-makers, but studies of humans suggest that people tend to be more averse to choosing ambiguous options than risky options with known probabilities. To illuminate the evolutionary roots of human economic behaviour, we examined whether our closest living relatives, chimpanzees (Pan troglodytes) and bonobos (Pan paniscus), share this bias against ambiguity. Apes chose between a certain option that reliably provided an intermediately preferred food type, and a variable option that could vary in the probability that it provided a highly preferred food type. To examine the impact of ambiguity on ape decision-making, we interspersed trials in which chimpanzees and bonobos had no knowledge about the probabilities. Both species avoided the ambiguous option compared with their choices for a risky option, indicating that ambiguity aversion is shared by humans, bonobos and chimpanzees.

Patient education preferences in ophthalmic care.

BACKGROUND: The learning preferences of ophthalmology patients were examined. METHODS: Results from a voluntary survey of ophthalmology patients were analyzed for education preferences and for correlation with race, age, and ophthalmic topic. RESULTS: To learn about eye disease, patients preferred one-on-one sessions with providers as well as printed materials and websites recommended by providers. Patients currently learning from the provider were older (average age 59 years), and patients learning from the Internet (average age 49 years) and family and friends (average age 51 years) were younger. Patients interested in cataracts, glaucoma, macular degeneration, and dry eye were older; patients interested in double vision and glasses were younger. There were racial differences regarding topic preferences, with Black patients most interested in glaucoma (46%), diabetic retinopathy (31%), and cataracts (28%) and White patients most interested in cataracts (22%), glaucoma (22%), and macular degeneration (19%). CONCLUSION: MOST OPHTHALMOLOGY PATIENTS PREFERRED PERSONALIZED EDUCATION: one-on-one with their provider or a health educator and materials (printed and electronic) recommended by their provider. Age-related topics were more popular with older patients, and diseases with racial risk factors were more popular with high risk racial groups.

Prevalence and risk factors of depressive symptoms in a Canadian palliative home care population: a cross-sectional study

Background: Depression in palliative care patients is important because of its intrinsic burden and association with elevated physical symptoms, reduced immunity and increased mortality risk. Identifying risk factors associated with depression can enable clinicians to more readily diagnose it, which is important since depression is treatable. The purpose of this cross-sectional study was to determine the prevalence of depressive symptoms and risk factors associated with them in a large sample of palliative home care patients.

Methods: The data come from interRAI Palliative Care assessments completed between 2006 and 2012. The sample (n = 5144) consists of adults residing in Ontario (Canada), receiving home care services, classified as palliative, and not experiencing significant cognitive impairment. Logistic regression identified the risk factors associated with depressive symptoms. The dependent variable was the Depression Rating Scale (DRS) and the independent variables were functional indicators from the interRAI assessment and other variables identified in the literature. We examined the results of the complete case and multiple imputation analyses, and found them to be similar.

Results: The prevalence of depressive symptoms was 9.8%. The risk factors associated with depressive symptoms were (pooled estimates, multiple imputation): low life satisfaction (OR = 3.01 [CI = 2.37-3.82]), severe and moderate sleep disorders (2.56 [2.05-3.19] and 1.56 [1.18-2.06]), health instability (2.12 [1.42-3.18]), caregiver distress 2.01 [1.62-2.51]), daily pain (1.73 [1.35-2.22]), cognitive impairment (1.45 [1.13-1.87]), being female (1.37 [1.11-1.68]), and gastrointestinal symptoms (1.27 [1.03-1.55]). Life satisfaction mediated the effect of prognostic awareness on depressive symptoms.

Conclusions: The prevalence of depressive symptoms in our study was close to the median of 10-20% reported in the palliative care literature, suggesting they are present but by no means inevitable in palliative patients. Most of the factors associated with depressive symptoms in our study are amenable to clinical intervention and often targeted in palliative care programs. Designing interventions to address them can be challenging, however, requiring careful attention to patient preferences, the spectrum of comorbid conditions they face, and their social supports. Life satisfaction was one of the strongest factors associated with depressive symptoms in our study, and is likely to be among the most challenging to address.

Shared decision making in patients at risk of cancer: The role of domain and numeracy

Background
Shared decision making has become an integral part of medical consultation. Research has, however, reported wide differences in individuals' desires to be involved in the decision-making process, and these differences in preferences are likely to be the result of a number of factors including age, education and numeracy.

Objective
To investigate whether patients at genetic risk for cancer had preferences for shared decision making that differed depending on medical domain (general health vs. cancer) and whether decision preferences are linked to numeracy abilities.

Methods
Four hundred and seventy-six women who consented to participate in response to an email sent by a local branch of the U.S.-based Cancer Genetics Network (CGN) to its members. Participants completed the Control Preference Scale, as well as an objective and subjective numeracy scales.

Results
Decision domain (cancer vs. general health) was not associated with women's preferences for involvement in decision making. Objective and subjective numeracy predicted a preference for decision involvement in general, and only objective numeracy was predictive with regard to cancer.

Conclusion
Participants were equally likely to state they wanted to play an active, collaborative or passive role in both medical domains (general and cancer). High-numeracy participants were more likely to express a desire for an active role in general and in case they were diagnosed with cancer.

Practice implications
Health authorities' recommendations to clinicians to include patients in their medical decisions are supported by patients' desires, and clinicians should be cognizant of their patients' preferences as well as their numeracy skills.

'Conditional candour' and 'knowing me': an interpretive description study on patient preferences for physician behaviours during end-of-life communication

OBJECTIVE: To understand patients' preferences for physician behaviours during end-of-life communication.

METHODS: We used interpretive description methods to analyse data from semistructured, one-on-one interviews with patients admitted to general medical wards at three Canadian tertiary care hospitals. Study recruitment took place from October 2012 to August 2013. We used a purposive, maximum variation sampling approach to recruit hospitalised patients aged ≥55 years with a high risk of mortality within 6-12 months, and with different combinations of the following demographic variables: race (Caucasian vs non-Caucasian), gender and diagnosis (cancer vs non-cancer).

RESULTS: A total of 16 participants were recruited, most of whom (69%) were women and 70% had a non-cancer diagnosis. Two major concepts regarding helpful physician behaviour during end-of-life conversations emerged: (1) 'knowing me', which reflects the importance of acknowledging the influence of family roles and life history on values and priorities expressed during end-of-life communication, and (2) 'conditional candour', which describes a process of information exchange that includes an assessment of patients' readiness, being invited to the conversation, and sensitive delivery of information.

CONCLUSIONS: Our findings suggest that patients prefer a nuanced approach to truth telling when having end-of-life discussions with their physician. This may have important implications for clinical practice and end-of-life communication training initiatives.

Global Systemic Risk and International Regulatory Coordination: Squaring Sovereignty and Financial Stability

In recent years much attention has been given to systemic risk and maintaining financial stability. Much of the focus, rightly, has been on market failures and the role of regulation in addressing them. This article looks at the role of domestic policies and government actions as sources of global instability. The global financial system is built upon global markets controlled by national financial and macroeconomic policies. In this context, regulatory asymmetries, diverging policy preferences, and government failures add a further dimension to global systemic risk not present at the national level.
Systemic risk is a result of the interplay between two independent variables: an underlying trigger event, in this analysis a domestic policy measure, and a transmission channel. The solution to systemic risk requires tackling one of these variables. In a domestic setting, the centralization of regulatory power into one single authority makes it easier to balance the delicate equilibrium between enhancing efficiency and reducing instability. However, in a global financial system in which national financial policies serve to maximize economic welfare, regulators will be confronted with difficult policy and legal tradeoffs.
We investigate the role that financial regulation plays in addressing domestic policy failures and in controlling the danger of global financial interdependence. To do so we analyse global financial interconnectedness, and explain its role in transmitting instability; we investigate the political economy dynamics at the origin of regulatory asymmetries and government failures; and we discuss the limits of regulation.

Risk Aversion, Intertemporal Substitution, and Option Pricing

This paper develops a general stochastic framework and an equilibrium asset pricing model that make clear how attitudes towards intertemporal substitution and risk matter for option pricing. In particular, we show under which statistical conditions option pricing formulas are not preference-free, in other words, when preferences are not hidden in the stock and bond prices as they are in the standard Black and Scholes (BS) or Hull and White (HW) pricing formulas. The dependence of option prices on preference parameters comes from several instantaneous causality effects such as the so-called leverage effect. We also emphasize that the most standard asset pricing models (CAPM for the stock and BS or HW preference-free option pricing) are valid under the same stochastic setting (typically the absence of leverage effect), regardless of preference parameter values. Even though we propose a general non-preference-free option pricing formula, we always keep in mind that the BS formula is dominant both as a theoretical reference model and as a tool for practitioners. Another contribution of the paper is to characterize why the BS formula is such a benchmark. We show that, as soon as we are ready to accept a basic property of option prices, namely their homogeneity of degree one with respect to the pair formed by the underlying stock price and the strike price, the necessary statistical hypotheses for homogeneity provide BS-shaped option prices in equilibrium. This BS-shaped option-pricing formula allows us to derive interesting characterizations of the volatility smile, that is, the pattern of BS implicit volatilities as a function of the option moneyness. First, the asymmetry of the smile is shown to be equivalent to a particular form of asymmetry of the equivalent martingale measure. Second, this asymmetry appears precisely when there is either a premium on an instantaneous interest rate risk or on a generalized leverage effect or both, in other words, whenever the option pricing formula is not preference-free. Therefore, the main conclusion of our analysis for practitioners should be that an asymmetric smile is indicative of the relevance of preference parameters to price options.

Skewness risk and bond prices

Statistical evidence is reported that even outside disaster periods, agents face negative consumption skewness, as well as positive inflation skewness. Quantitative implications of skewness risk for nominal loan contracts in a pure exchange economy are derived. Key modeling assumptions are Epstein-Zin preferences for traders and asymmetric distributions for consumption and inflation innovations. The model is solved using a third-order perturbation and estimated by the simulated method of moments. Results show that skewness risk accounts for 6 to 7 percent of the risk premia depending on the bond maturity.

Ownership structure and risk at Colombian banks

The separation between ownership and the control of capital in banks generates differences in the preferences for risk among shareholders and the manager. These differences could imply a corporate governance problem in banks with a dispersed ownership, since owners fail to exert control in the allocation of capital. In this paper we examine the relationship between the ownership structure and risk for Colombian banks. Our results suggest that a high ownership concentration leads to higher levels of risk.

Risk, ambiguity, and diversification

Attitudes toward risk influence the decision to diversify among uncertain options. Yet, because in most situations the options are ambiguous, attitudes toward ambiguity may also play an important role. I conduct a laboratory experiment to investigate the effect of ambiguity on the decision to diversify. I find that diversification is more prevalent and more persistent under ambiguity than under risk. Moreover, excess diversification under ambiguity is driven by participants who stick with a status quo gamble when diversification among gambles is not feasible. This behavioral pattern cannot be accommodated by major theories of choice under ambiguity.

Empirical test of an agricultural landscape model: the importance of farmer preference for risk aversion and crop complexity

Developing models to predict the effects of social and economic change on agricultural landscapes is an important challenge. Model development often involves making decisions about which aspects of the system require detailed description and which are reasonably insensitive to the assumptions. However, important components of the system are often left out because parameter estimates are unavailable. In particular, measurements of the relative influence of different objectives, such as risk, environmental management, on farmer decision making, have proven difficult to quantify. We describe a model that can make predictions of land use on the basis of profit alone or with the inclusion of explicit additional objectives. Importantly, our model is specifically designed to use parameter estimates for additional objectives obtained via farmer interviews. By statistically comparing the outputs of this model with a large farm-level land-use data set, we show that cropping patterns in the United Kingdom contain a significant contribution from farmer’s preference for objectives other than profit. In particular, we found that risk aversion had an effect on the accuracy of model predictions, whereas preference for a particular number of crops grown was less important. While nonprofit objectives have frequently been identified as factors in farmers’ decision making, our results take this analysis further by demonstrating the relationship between these preferences and actual cropping patterns.

Exploring farmer preferences for contagious bovine pleuropneumonia vaccination: a case study of Narok District, Kenya

Contagious bovine pleuropneumonia (CBPP) is an economically important disease in most of sub-Saharan Africa. A conjoint analysis and ordered probit regression models were used to measure the preferences of farmers for CBPP vaccine and vaccination attributes. This was with regard to inclusion or not of an indicator in the vaccine, vaccine safety, vaccine stability as well as frequency of vaccination, vaccine administration and the nature of vaccination. The analysis was carried out in 190 households in Narok District of Kenya between October and December 2006 using structured questionnaires, 16 attribute profiles and a five-point Likert scale. The factors affecting attribute valuation were shown through a two-way location interaction model. The study also demonstrated the relative importance (RI) of attributes and the compensation value of attribute levels. The attribute coefficient estimates showed that farmers prefer a vaccine that has an indicator, is 100% safe and is administered by the government (p<0.0001). The preferences for the vaccine attributes were consistent with expectations. Preferences for stability, frequency of vaccination and nature of vaccination differed amongst farmers (p>0.05). While inclusion of an indicator in the vaccine was the most important attribute (RI=43.6%), price was the least important (RI=0.5%). Of the 22 household factors considered, 15 affected attribute valuation. The compensation values for a change from non inclusion to inclusion of an indicator, 95-100% safety, 2h to greater than 2h stability and from compulsory to elective vaccination were positive while those for a change from annual to biannual vaccination and from government to private administration were negative. The study concluded that the farmers in Narok District had preferences for specific vaccine and vaccination attributes. These preferences were conditioned by various household characteristics and disease risk factors. On average the farmers would need to be compensated or persuaded to accept biannual and private vaccination against CBPP. There is need for consideration of farmer preferences for vaccine attribute levels during vaccine formulations and farmer preferences for vaccination attribute levels when designing delivery of vaccines.

Preferences, common knowledge and speculative trade

We study the proposition that if it is common knowledge that en allocation of assets is ex-ante pareto efficient, there is no further trade generated by new information. The key to this result is that the information partitions and other characteristics of the agents must be common knowledge and that contracts, or asset markets, must be complete. It does not depend on learning, on 'lemons' problems, nor on agreement regarding beliefs and the interpretation of information. The only requirement on preferences is state-additivity; in particular, traders need not be risk-averse. We also prove the converse result that "no-trade results" imply that traders' preferences can be represented by state-additive utility functions. We analyze why examples of other widely studied preferences (e.g., Schmeidler (1989)) allow "speculative" trade.