Do financial professionals behave according to prospect theory? An experimental study

M. ABDELLAOUI, H. Bleichrodt, H. Kammoun

Theory and Decision

mars 2013, vol. 74, n°3, pp.411-429

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : theory Loss aversion Field data Behavioral finance Experimental economicsly from laboratory experiments using

Prospect theory is increasingly used to explain deviations from the traditional paradigm of rational agents. Empirical support for prospect theory comes main student samples. It is obviously important to know whether and to what extent this support generalizes to more naturally occurring circumstances. This article explores this question and measures prospect theory for a sample of private bankers and fund managers. We obtained clear support for prospect theory. Our financial professionals behaved according to prospect theory and violated expected utility maximization. They were risk averse for gains and risk seeking for losses and their utility was concave for gains and (slightly) convex for losses. They were also averse to losses, but less so than commonly observed in laboratory studies and assumed in behavioral finance. A substantial minority focused on gains and largely ignored losses, behavior reminiscent of what caused the current financial crisis

Do Women Choose Different Jobs from Men? Mechanisms of Application Segregation in the Market for Managerial Workers


Organization Science

mai-juin 2013, vol. 24, n°3, pp.737-756

Départements : Management et Ressources Humaines, GREGHEC (CNRS)

Mots clés : Gender segregation, Hiring, Job applications, Supply side, Matching, Careers, Financial Services industry, Gender roles, Identification, Work–life balance

This paper examines differences in the jobs for which men and women apply in order to better understand gender segregation in managerial jobs. We develop and test an integrative theory of why women might apply to different jobs than men. We note that constraints based on gender role socialization may affect three determinants of job applications: how individuals evaluate the rewards provided by different jobs, whether they identify with those jobs, and whether they believe that their applications will be successful. We then develop hypotheses about the role of each of these decision factors in mediating gender differences in job applications. We test these hypotheses using the first direct comparison of how similarly qualified men and women apply to jobs, based on data on the job searches of MBA students. Our findings indicate that women are less likely than men to apply to finance and consulting jobs and are more likely to apply to general management positions. These differences are partly explained by women’s preference for jobs with better anticipated work–life balance, their lower identification with stereotypically masculine jobs, and their lower expectations of job offer success in such stereotypically masculine jobs. We find no evidence that women are less likely to receive job offers in any of the fields studied. These results point to some of the ways in which gender differences can become entrenched through the long-term expectations and assumptions that job candidates carry with them into the application process.

Does academic entrepreneurship pay?

T. B. ASTEBRO, P. Braunerhjelm, A. Broström

Industrial and Corporate Change

février 2013, vol. 22, n°1, pp.281-311

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

We investigate the private returns for academics that start new businesses. Total earnings for the universe of 478 individuals working at Swedish universities who quit to become full-time entrepreneurs between 1999 and 2008 are compiled. To the best of our knowledge, this is the first analysis of entrepreneurial returns to include capital gains. Entrepreneurship for academics appears a gradual process and episodic. Earnings are similar before and after becoming an entrepreneur, and dividends and capital gains are inconsequential. But the income risk is more than three times higher in entrepreneurship

Does injustice affect your sense of taste and smell? The mediating role of moral disgust


Journal of Experimental Social Psychology

septembre 2013, vol. 49, n°5, pp.852-859

Does pre-entry licensing undermine the performance of subsequent independent activities? Evidence from the global aerospace industry, 1944-2000

L. Mulotte, P. DUSSAUGE, W. Mitchell

Strategic Management Journal

mars 2013, vol. 34, n°3, pp.358-372

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : new business entry; licensing; experiential learning; overconfidence; causal ambiguity

We study how firms' use of in-licensing for their initial entry to a business domain can detract from the performance of their subsequent autonomous endeavors in the domain. We argue that in-licensing produces high levels of causal ambiguity about factors that drive the performance achieved with the licensed product. In turn, the experience that firms gather through pre-entry licensing is likely to generate superstitious learning and overconfidence that undermine the performance of licensees' subsequent independent operations. The biases will be particularly strong in the face of contextual dissimilarity. We find consistent evidence in a study of firms that entered the global aircraft industry between 1944 and 2000. The research helps advance the understanding of the benefits and costs of markets for technology

Dynamic sender-receiver games

N. VIEILLE, J. Renault, E. Solan

Journal of Economic Theory

mars 2013, vol. 148, n°2, pp.502-534

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Sender-receiver, Dynamic games, Bayesian games, Communication, Repeated games

We consider a dynamic version of sender–receiver games, where the sequence of states follows an irreducible Markov chain observed by the sender. Under mild assumptions, we provide a simple characterization of the limit set of equilibrium payoffs, as players become very patient. Under these assumptions, the limit set depends on the Markov chain only through its invariant measure. The (limit) equilibrium payoffs are the feasible payoffs that satisfy an individual rationality condition for the receiver, and an incentive compatibility condition for the sender

Dynamics of Inductive Inference in a Unified Framework

I. GILBOA, L. Samuelson, D. Schmeidler

Journal of Economic Theory

juillet 2013, vol. 148, n°4, pp.1399-1432

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Induction, Learning, Analogies, Theories, Case-based reasoning, Rule-based reasoning

We present a model of inductive inference that includes, as special cases, Bayesian reasoning, case-based reasoning, and rule-based reasoning. This unified framework allows us to examine how the various modes of inductive inference can be combined and how their relative weights change endogenously. For example, we establish conditions under which an agent who does not know the structure of the data generating process will decrease, over the course of her reasoning, the weight of credence put on Bayesian vs. non-Bayesian reasoning. We illustrate circumstances under which probabilistic models are used until an unexpected outcome occurs, whereupon the agent resorts to more basic reasoning techniques, such as case-based and rule-based reasoning, until enough data are gathered to formulate a new probabilistic model

Earning Manipulation and Expected Returns


Financial Analysts Journal

avril 2013

Egocentric categorization and product judgment: seeing your traits in what you own (and their opposite in what you don't)


Journal of Consumer Research

juin 2013, vol. 40, n°1

Employee Justice Across Cultures: A Meta-Analytic Review


Journal of Management

janvier 2013, vol. 39, n°1