A Survey Measure of Risk Aversion

We Use Survey Data on the Well-Being of Individuals to Measure Attitude Toward Risk. Risk Neutrality Cannot Be Rejected by the Data.

Research of the Influence of Methods of Compression on the Co-efficient of Information Security of Objects Under Attacks

In this paper a possibility for quantitative measuring of information security of objects, exposed to information attacks and processed with methods of compression, is represented. A co-efficient of information security, which reflects the influence of the level of compression obtained after applying methods of compression to objects and the time, required by the attack to get access to the corresponding object, is proposed. Methods��� groups with the highest and respectively the lowest values of the co-efficient of information security for all methods��� groups in relation to all attacks��� groups are determined. Assessments and conclusions for future investigations are proposed.

Attitudes towards risk in financial decision making

Doutoramento em Gest��o

Effort-reward imbalance at work and the co-occurrence of lifestyle risk factors: cross-sectional survey in a sample of 36,127 public sector employees

Background In occupational life, a mismatch between high expenditure of effort and receiving few rewards may promote the co-occurrence of lifestyle risk factors, however, there is insufficient evidence to support or refute this hypothesis. The aim of this study is to examine the extent to which the dimensions of the Effort-Reward Imbalance (ERI) model ��� effort, rewards and ERI ��� are associated with the co-occurrence of lifestyle risk factors. Methods Based on data from the Finnish Public Sector Study, cross-sectional analyses were performed for 28,894 women and 7233 men. ERI was conceptualized as a ratio of effort and rewards. To control for individual differences in response styles, such as a personal disposition to answer negatively to questionnaires, occupational and organizational -level ecological ERI scores were constructed in addition to individual-level ERI scores. Risk factors included current smoking, heavy drinking, body mass index ���25 kg/m2, and physical inactivity. Multinomial logistic regression models were used to estimate the likelihood of having one risk factor, two risk factors, and three or four risk factors. The associations between ERI and single risk factors were explored using binary logistic regression models. Results After adjustment for age, socioeconomic position, marital status, and type of job contract, women and men with high ecological ERI were 40% more likely to have simultaneously ���3 lifestyle risk factors (vs. 0 risk factors) compared with their counterparts with low ERI. When examined separately, both low ecological effort and low ecological rewards were also associated with an elevated prevalence of risk factor co-occurrence. The results obtained with the individual-level scores were in the same direction. The associations of ecological ERI with single risk factors were generally less marked than the associations with the co-occurrence of risk factors. Conclusion This study suggests that a high ratio of occupational efforts relative to rewards may be associated with an elevated risk of having multiple lifestyle risk factors. However, an unexpected association between low effort and a higher likelihood of risk factor co-occurrence as well as the absence of data on overcommitment (and thereby a lack of full test of the ERI model) warrant caution in regard to the extent to which the entire ERI model is supported by our evidence.

Preference intensities and risk aversion in school choice: a laboratory experiment

We experimentally investigate in the laboratory two prominent mechanisms that are employed in school choice programs to assign students to public schools. We study how individual behavior is influenced by preference intensities and risk aversion. Our main results show that (a) the Gale-Shapley mechanism is more robust to changes in cardinal preferences than the Boston mechanism independently of whether individuals can submit a complete or only a restricted ranking of the schools and (b) subjects with a higher degree of risk aversion are more likely to play "safer" strategies under the Gale-Shapley but not under the Boston mechanism. Both results have important implications for the efficiency and the stability of the mechanisms.

Measuring risk aversion with lists: A new bias

Various experimental procedures aimed at measuring individual risk aversion involve alist of pairs of alternative prospects. We first study the widely used method by Holt andLaury (2002), for which we find that the removal of some items from the lists yields asystematic decrease in risk aversion. This bias is quite distinct from other confoundsthat have been previously observed in the use of the Holt and Laury method. It may berelated to empirical phenomena and theoretical developments where better prospectsincrease risk aversion. Nevertheless, we have also found that the more recent elicitationmethod due to Abdellaoui et al. (2011), also based on lists, does not display anystatistically significant bias when the corresponding items of the list are removed. Ourresults suggest that methods other than the popular Holt and Laury one may bepreferable for the measurement of risk aversion.

Accounting for risk aversion in repeated prisoners��� dilemma games: an experimental test

We apply experimental methods to study the role of risk aversion on players��� behavior in repeated prisoners��� dilemma games. Faced with quantitatively equal discount factors, the most risk-averse players will choose Nash strategies more often in the presence of uncertainty than when future profits are discounted in a deterministic way. Overall, we find that risk aversion relates negatively with the frequency of collusive outcomes.

The lottery-panel task for bi-dimensional parameter-free elicitation of risk attitudes

We propose first, a simple task for the eliciting attitudes toward risky choice, the SGG lottery-panel task, which consists in a series of lotteries constructed to compensate riskier options with higher risk-return trade-offs. Using Principal Component Analysis technique, we show that the SGG lottery-panel task is capable of capturing two dimensions of individual risky decision making i.e. subjects��� average risk taking and their sensitivity towards variations in risk-return. From the results of a large experimental dataset, we confirm that the task systematically captures a number of regularities such as: A tendency to risk averse behavior (only around 10% of choices are compatible with risk neutrality); An attraction to certain payoffs compared to low risk lotteries, compatible with over-(under-) weighting of small (large) probabilities predicted in PT and; Gender differences, i.e. males being consistently less risk averse than females but both genders being similarly responsive to the increases in risk-premium. Another interesting result is that in hypothetical choices most individuals increase their risk taking responding to the increase in return to risk, as predicted by PT, while across panels with real rewards we see even more changes, but opposite to the expected pattern of riskier choices for higher risk-returns. Therefore, we conclude from our data that an ���economic anomaly��� emerges in the real reward choices opposite to the hypothetical choices. These findings are in line with Camerer's (1995) view that although in many domains, paid subjects probably do exert extra mental effort which improves their performance, choice over money gambles is not likely to be a domain in which effort will improve adherence to rational axioms (p. 635). Finally, we demonstrate that both dimensions of risk attitudes, average risk taking and sensitivity towards variations in the return to risk, are desirable not only to describe behavior under risk but also to explain behavior in other contexts, as illustrated by an example. In the second study, we propose three additional treatments intended to elicit risk attitudes under high stakes and mixed outcome (gains and losses) lotteries. Using a dataset obtained from a hypothetical implementation of the tasks we show that the new treatments are able to capture both dimensions of risk attitudes. This new dataset allows us to describe several regularities, both at the aggregate and within-subjects level. We find that in every treatment over 70% of choices show some degree of risk aversion and only between 0.6% and 15.3% of individuals are consistently risk neutral within the same treatment. We also confirm the existence of gender differences in the degree of risk taking, that is, in all treatments females prefer safer lotteries compared to males. Regarding our second dimension of risk attitudes we observe, in all treatments, an increase in risk taking in response to risk premium increases. Treatment comparisons reveal other regularities, such as a lower degree of risk taking in large stake treatments compared to low stake treatments and a lower degree of risk taking when losses are incorporated into the large stake lotteries. Results that are compatible with previous findings in the literature, for stake size effects (e.g., Binswanger, 1980; Antoni Bosch-Dom��nech & Silvestre, 1999; Hogarth & Einhorn, 1990; Holt & Laury, 2002; Kachelmeier & Shehata, 1992; K��hberger et al., 1999; B. J. Weber & Chapman, 2005; Wik et al., 2007) and domain effect (e.g., Brooks and Zank, 2005, Schoemaker, 1990, Wik et al., 2007). Whereas for small stake treatments, we find that the effect of incorporating losses into the outcomes is not so clear. At the aggregate level an increase in risk taking is observed, but also more dispersion in the choices, whilst at the within-subjects level the effect weakens. Finally, regarding responses to risk premium, we find that compared to only gains treatments sensitivity is lower in the mixed lotteries treatments (SL and LL). In general sensitivity to risk-return is more affected by the domain than the stake size. After having described the properties of risk attitudes as captured by the SGG risk elicitation task and its three new versions, it is important to recall that the danger of using unidimensional descriptions of risk attitudes goes beyond the incompatibility with modern economic theories like PT, CPT etc., all of which call for tests with multiple degrees of freedom. Being faithful to this recommendation, the contribution of this essay is an empirically and endogenously determined bi-dimensional specification of risk attitudes, useful to describe behavior under uncertainty and to explain behavior in other contexts. Hopefully, this will contribute to create large datasets containing a multidimensional description of individual risk attitudes, while at the same time allowing for a robust context, compatible with present and even future more complex descriptions of human attitudes towards risk.

Scheduling of a hydro producer considering head-dependency, price scenarios and risk-aversion

In this paper, a mixed-integer quadratic programming approach is proposed for the short-term hydro scheduling problem, considering head-dependency, discontinuous operating regions and discharge ramping constraints. As new contributions to earlier studies, market uncertainty is introduced in the model via price scenarios, and risk aversion is also incorporated by limiting the volatility of the expected profit through the conditional value-at-risk. Our approach has been applied successfully to solve a case Study based on one of the main Portuguese cascaded hydro systems, requiring a negligible computational time.

Co-infection and risk factors of tuberculosis in a Mexican HIV+ population

INTRODUCTION: The situation of tuberculosis (TB) is being modified by the human immunodeficiency virus (HIV), which is increasing the occurrence of new cases and the generation of drug resistant strains, affecting not only the people infected with HIV, but also their close contacts and the general population, conforming a serious public health concern. However, the magnitudes of the factors associated to this co-infection differ considerably in relation to the population groups and geographical areas. METHODS: In order to evaluate the prevalence and risk factors for the co-infection of tuberculosis (TB) in a population with human immunodeficiency virus (HIV+) in the Southeast of Mexico, we made the analysis of clinical and epidemiological variables and the diagnosis of tuberculosis by isolation of mycobacteria from respiratory samples. RESULTS: From the 147 HIV+ individuals analyzed, 12 were culture positive; this shows a prevalence of 8% for the co-infection. The only variable found with statistical significance for the co-infection was the number of CD4-T < 200 cells/mm��, OR 13 (95%, CI 2-106 vs 12-109). CONCLUSIONS: To our knowledge this is the first report describing the factors associated with tuberculosis co -infection with HIV in a population from Southern Mexico. The low number of CD4 T-cells was the only variable associated with the TB co-infection and the rest of the variables provide scenarios that require specific and particular interventions for this population group.

Heterogeneity and the formation of risk - sharing coalitions

We offer a new explanation of partial risk sharing based on coalition formation and segmentation of society in a risky environment, without assuming limited commitment and imperfect information. Heterogenous individuals in a society freely choose with whom they will share risk. A partition belonging to the core of the membership game obtains. Perfect risk sharing does not necessarily arise. Focusing on mutual insurance rule and assuming that individuals only differ with respect to risk, we show that the core partition is homophily-based. The distribution of risk affects the number and size of these coalitions. Individuals may pay a lower risk premium in riskier societies. A higher heterogeneity in risk leads to a lower degree of risk sharing. We discuss how the endogenous partition of society into risk-sharing coalitions may shed light on empirical evidence on partial risk sharing. The case of heterogenous risk aversion leads to similar results.

Does uncertainty cause inertia in decision making? An experimental study of the role of regret aversion and indecisiveness

Previous research has shown that often there is clear inertia in individual decision making---that is, a tendency for decision makers to choose a status quo option. I conduct a laboratory experiment to investigate two potential determinants of inertia in uncertain environments: (i) regret aversion and (ii) ambiguity-driven indecisiveness. I use a between-subjects design with varying conditions to identify the effects of these two mechanisms on choice behavior. In each condition, participants choose between two simple real gambles, one of which is the status quo option. I find that inertia is quite large and that both mechanisms are equally important.

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.

Risk aversion, overconfidence and private information as determinants of majority thresholds

We present and experimentally test a theoretical model of majority threshold determination as a function of voters��� risk preferences. The experimental results confirm the theoretical prediction of a positive correlation between the voter's risk aversion and the corresponding preferred majority threshold. Furthermore, the experimental results show that a voter's preferred majority threshold negatively relates to the voter's confidence about how others will vote. Moreover, in a treatment in which individuals receive a private signal about others��� voting behaviour, the confidence-related motivation of behaviour loses ground to the signal's strength.