Research into accounting risk-return relations largely relied on reference-based models of managerial choice. This focus ignores other explanations that may contribute to our understanding. Our study extends prior research by incorporating agency theory and implicit contracts theory into models based on the behavioral theory of the firm. We test our hypotheses in a large sample of US manufactur...

In the context of finite normal form games, this paper addresses the formalization and implications of the hypothesis that players are rational and that this is common knowledge. The innovation is to admit notions of rationality other than subjective expected utility maximization. For example, rationality can be defined by the alternative restrictions that preferences are probabilistically soph...

The number of Internet news media outlets has grown rapidly in recent years. This paper analyzes the effects of media proliferation on electoral outcomes and social welfare. We assume voters are information-seeking but choose outlets that are excessively partisan given the voters’ own ideological preferences, due to quasi-rationality. We find that if voters who think (correctly or not) that the...

In this paper we investigate whether macroeconomic uncertainty could distort banks’ allocation of loanable funds. To provide a road– map for our empirical investigation, we present a simple framework which demonstrates that lower uncertainty about the return from lending should lead to a more unequal distribution of lending across banks as managers take advantage of more precise knowledge of di...

This paper considers the problem of a risk-neutral firm offering a gamble to consumers with preferences given by prospect theory. Under conditions satisfied by virtually all functional forms used in the literature, firms can extract arbitrarily high expected values from consumers. Moreover, for any given lottery, there exists another lottery that makes both the firm and the consumer better off....

An experiment tested whether and in what circumstances people are more likely to believe an event simply because it makes them better off. Subjects observed a financial asset's historical price chart, and received both an accuracy bonus for predicting the price at some future point, and an unconditional award that was either increasing or decreasing in this price. Despite incentives for hedging...

The purpose of this paper is to establish the intrinsic relations between the cores of exact games on σ-algebras and the extensions of exact games to function spaces. Given a probability space, exact functionals are defined on L∞ as an extension of exact games. To derive a probabilistic representation for exact functionals, we endow them with two probabilistic conditions: law invariance and the...

A Covid-19-jarvany okozta gazdasagi valsag a vallalatok tobbseget keszuletlenul erte 2020 elejen, pedig sokak szerint helyzet korantsem volt varatlan, sőt hasonlo jarvanyokra jovőben is szamitanunk kell. Eppen ezert kulonosen fontos pandemia kockazatok attekintese, rendszerezese, hiszen ez lehet egy kesőbbi sikeres kockazatkezeles kiindulopontja. Kutatasunkban forraselemzessel, kerdőivezessel e...

Machines are one of the most important production elements used by companies in phase. Sudden deterioration machinery creates a process that can lead to halt and therefore delay orders. For this reason, enterprises decide replace their old machines with newer technological machines. This replacement decision is not easy as it includes many criteria there alternative on market. From point view, ...

Failure is embarrassing. In gambles involving both skill and chance, we show that a strategic desire to avoid appearing unskilled generates behavioral anomalies consistent with prospect theory’s concepts of loss aversion, framing effects, and probability weighting. Based on models from the career concerns literature that formalize early social psychology models of risk taking, the results show ...