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Operationalizing a Behavioral Finance Risk Model: A Theoretical and Empirical Framework

Author

Listed:
  • Rassoul Yazdipour

    (California State University, Fresno)

  • William P. Neace

    (Health Care Excel)

Abstract

To keep up with the rather fast-growing interest in the discipline of Behavioral Finance and Economics caused in part by the new realities of the post-200S world, and the realities prevailing over three decades before and leading up to that year- there is a discernible need for the production of new generations of testable and yet more realistic models and theories as guides for financial and economic decision makers everywhere. The present work is one such attempt in that direction. This writing first improves upon a recently developed, and real-life-inspired, Behavioral Finance Risk Model (Yazdipour, 2011) and then offers a specific methodology for testing it.

Suggested Citation

  • Rassoul Yazdipour & William P. Neace, 2013. "Operationalizing a Behavioral Finance Risk Model: A Theoretical and Empirical Framework," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 16(2), pages 1-32, Spring.
  • Handle: RePEc:pep:journl:v:16:y:2013:i:2:p:1-32
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    References listed on IDEAS

    as
    1. Ann-Renée Blais & Elke U. Weber, 2006. "A Domain-Specific Risk-Taking (DOSPERT)Scale for Adult Populations," CIRANO Working Papers 2006s-24, CIRANO.
    2. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    3. Ann-Renée Blais & Elke U. Weber, 2006. "A Domain-Specific Risk-Taking (DOSPERT) scale for adult populations," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 1, pages 33-47, July.
    4. Froot, Kenneth A & Scharfstein, David S & Stein, Jeremy C, 1993. " Risk Management: Coordinating Corporate Investment and Financing Policies," Journal of Finance, American Finance Association, vol. 48(5), pages 1629-1658, December.
    5. Elke U. Weber & Richard A. Milliman, 1997. "Perceived Risk Attitudes: Relating Risk Perception to Risky Choice," Management Science, INFORMS, vol. 43(2), pages 123-144, February.
    6. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-563, June.
    7. James G. March & Zur Shapira, 1987. "Managerial Perspectives on Risk and Risk Taking," Management Science, INFORMS, vol. 33(11), pages 1404-1418, November.
    8. Yoav Ganzach & Shmuel Ellis & Asya Pazy & Tali Ricci-Siag, 2008. "On the perception and operationalization of risk perception," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3, pages 317-324, April.
    9. Cho, Jinsook & Lee, Jinkook, 2006. "An integrated model of risk and risk-reducing strategies," Journal of Business Research, Elsevier, vol. 59(1), pages 112-120, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Behavioral Finance; Behavioral Economics; Risk and uncertainty; Risk Model;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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