IDEAS home Printed from https://ideas.repec.org/a/pep/journl/v16y2013i2p1-32.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: http://jefsite.org/RePEc/pep/journl/jef-2013-16-2-a-yazdipour.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kenneth R. MacCrimmon & Donald A. Wehrung, 1990. "Characteristics of Risk Taking Executives," Management Science, INFORMS, vol. 36(4), pages 422-435, April.
    2. repec:cup:judgdm:v:1:y:2006:i::p:33-47 is not listed on IDEAS
    3. 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.
    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. Ganzach, Yoav, 2000. "Judging Risk and Return of Financial Assets," Organizational Behavior and Human Decision Processes, Elsevier, vol. 83(2), pages 353-370, November.
    6. repec:cup:judgdm:v:3:y:2008:i::p:317-324 is not listed on IDEAS
    7. Rassoul Yazdipour, 2011. "Advances in Entrepreneurial Finance," Springer Books, Springer, number 978-1-4419-7527-0, December.
    8. Weber, Elke U. & Anderson, Carolyn J. & Birnbaum, Michael H., 1992. "A theory of perceived risk and attractiveness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 52(3), pages 492-523, August.
    9. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    10. Ann-Renée Blais & Elke U. Weber, 2006. "A Domain-Specific Risk-Taking (DOSPERT)Scale for Adult Populations," CIRANO Working Papers 2006s-24, CIRANO.
    11. Rassoul Yazdipour, 2011. "A Behavioral Finance Approach to Decision Making in Entrepreneurial Finance," Springer Books, in: Advances in Entrepreneurial Finance, chapter 0, pages 11-29, Springer.
    12. 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.
    13. James G. March & Zur Shapira, 1987. "Managerial Perspectives on Risk and Risk Taking," Management Science, INFORMS, vol. 33(11), pages 1404-1418, November.
    14. Robert A. Olsen, 2011. "Financial Risk Perceptions: A Behavioral Perspective," Springer Books, in: Advances in Entrepreneurial Finance, chapter 0, pages 45-67, Springer.
    15. 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)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Breitmayer, Bastian & Pelster, Matthias, 2018. "Affect and stock returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 18(C), pages 76-84.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Canales, Elizabeth & Bergtold, Jason S. & Williams, Jeffery & Peterson, Jeffrey, 2015. "Estimating farmers’ risk attitudes and risk premiums for the adoption of conservation practices under different contractual arrangements: A stated choice experiment," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205640, Agricultural and Applied Economics Association.
    2. Simon Gollisch & Barbara Hedderich & Ludwig Theuvsen, 2016. "Reference points and risky decision-making in agricultural trade firms: A case study in Germany," Department of Agricultural and Rural Development (DARE) Discussion Papers 260773, Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE).
    3. Gollisch, Simon & Hedderich, Barbara & Theuvsen, Ludwig, 2016. "Reference points and risky decision-making in agricultural trade firms: A case study in Germany," DARE Discussion Papers 1609, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    4. Lambert, Jérôme & Bessière, Véronique & N’Goala, Gilles, 2012. "Does expertise influence the impact of overconfidence on judgment, valuation and investment decision?," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1115-1128.
    5. Enrico Maria Cervellati & Pierpaolo Pattitoni & Marco Savioli, 2013. "Entrepreneurial Under-Diversification: Over Optimism and Overconfidence," Working Paper series 09_13, Rimini Centre for Economic Analysis, revised May 2016.
    6. Ann-Renée Blais & Elke U. Weber, 2006. "A Domain-Specific Risk-Taking (DOSPERT)Scale for Adult Populations," CIRANO Working Papers 2006s-24, CIRANO.
    7. Renato Frey & Shannon M. Duncan & Elke U. Weber, 2023. "Towards a typology of risk preference: Four risk profiles describe two-thirds of individuals in a large sample of the U.S. population," Journal of Risk and Uncertainty, Springer, vol. 66(1), pages 1-17, February.
    8. Srilata A. Zaheer, "undated". "Acceptable Risk: A Study of Global Currency Trading Rooms in the US and Japan," Center for Financial Institutions Working Papers 97-22, Wharton School Center for Financial Institutions, University of Pennsylvania.
    9. repec:cup:judgdm:v:3:y:2008:i::p:317-324 is not listed on IDEAS
    10. Forlani, David & Mullins, John W., 2000. "Perceived risks and choices in entrepreneurs' new venture decisions," Journal of Business Venturing, Elsevier, vol. 15(4), pages 305-322, July.
    11. Andrea C. Hupman & Jay Simon, 2023. "The Legacy of Peter Fishburn: Foundational Work and Lasting Impact," Decision Analysis, INFORMS, vol. 20(1), pages 1-15, March.
    12. Stefanescu, Razvan & Dumitriu, Ramona, 2015. "Alegerea soluţiilor pentru expunerile faţă de risc [Choosing solutions to risk exposures]," MPRA Paper 65074, University Library of Munich, Germany.
    13. Peter J Buckley & Liang Chen & L Jeremy Clegg & Hinrich Voss, 2018. "Risk propensity in the foreign direct investment location decision of emerging multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 153-171, February.
    14. Manel Baucells & Cristina Rata, 2006. "A Survey Study of Factors Influencing Risk-Taking Behavior in Real-World Decisions Under Uncertainty," Decision Analysis, INFORMS, vol. 3(3), pages 163-176, September.
    15. Dylan Minor, 2016. "Risk Preferences and Misconduct: Evidence from Politicians," Harvard Business School Working Papers 16-073, Harvard Business School.
    16. Enrico Maria Cervellati & Pierpaolo Pattitoni & Marco Savioli, 2016. "Cognitive Biases and Entrepreneurial Under-Diversification," Working Paper series 16-24, Rimini Centre for Economic Analysis.
    17. Joost M.E. Pennings & Ale Smidts, 2000. "Assessing the Construct Validity of Risk Attitude," Management Science, INFORMS, vol. 46(10), pages 1337-1348, October.
    18. Jayson S. Jia & Uzma Khan & Ab Litt, 2015. "The Effect of Self-Control on the Construction of Risk Perceptions," Management Science, INFORMS, vol. 61(9), pages 2259-2280, September.
    19. Nikolaos Theriou & Vassilis Aggelidis, 2014. "Management Accounting Systems, Top Management Team’s Risk Characteristics and Their Effect on Strategic Change," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 3-38.
    20. Olapeju Comfort Ogunmokun & Oluwasoye P. Mafimisebi & Demola Obembe, 2023. "Prospect theory and bank credit risk decision-making behaviour: a systematic literature review and future research agenda," SN Business & Economics, Springer, vol. 3(4), pages 1-25, April.
    21. Christoffersen, Jeppe & Holzmeister, Felix & Plenborg, Thomas, 2023. "What is risk to managers?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).

    More about this item

    Keywords

    Behavioral Finance; Behavioral Economics; Risk and uncertainty; Risk Model;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pep:journl:v:16:y:2013:i:2:p:1-32. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Craig Everett (email available below). General contact details of provider: https://edirc.repec.org/data/bapepus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.