Archivio per 10 novembre 2013

10
Nov
13

CFA Institute Conference Proceedings Quarterly : Risk Management beyond Asset Class Diversification | CFA Institute Publications.

See on Scoop.itBounded Rationality and Beyond
Abstract

Asset allocation is evolving into an approach based on forecasts driven by macroeconomics and risk factor diversification. The dynamic nature of markets requires both secular and cyclical investment horizons. In addition, investors should look beyond volatility as a measure of risk and explicitly estimate the risk of tail events.

 
See on www.cfapubs.org

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10
Nov
13

CFA Institute Conference Proceedings Quarterly : Risk Management beyond Asset Class Diversification | CFA Institute Publications.

See on Scoop.itBounded Rationality and Beyond
Abstract

Asset allocation is evolving into an approach based on forecasts driven by macroeconomics and risk factor diversification. The dynamic nature of markets requires both secular and cyclical investment horizons. In addition, investors should look beyond volatility as a measure of risk and explicitly estimate the risk of tail events.

 
See on cfapubs.org

10
Nov
13

Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics by Russell B. Korobkin, Thomas S. Ulen :: SSRN

See on Scoop.itBounded Rationality and Beyond

Abstract:      
As law and economics turns 40 years old, its continued vitality is threatened by its unrealistic core behavioral assumption: that people subject to the law act rationally. Professors Korobkin and Ulen argue that law and economics can reinvigorate itself by replacing the rationality assumption with a more nuanced understanding of human behavior that draws on cognitive psychology, sociology and other behavioral sciences, thus creating a new scholarly paradigm called “law and behavioral science”. This article provides an early blueprint for research in this paradigm. 

The authors first explain the various ways the rationality assumption is used in legal scholarship, and why it leads to unsatisfying policy prescriptions. They then systematically examine the empirical evidence inconsistent with the rationality assumption and, drawing on a wide-range of substantive areas of law, explain how normative policy conclusions of law and economics will change and improve under the law-and-behavioral-science approach. 

 

See on papers.ssrn.com

10
Nov
13

Law and Behavioral Science: Removing the Rationality Assumption from Law and Economics by Russell B. Korobkin, Thomas S. Ulen :: SSRN

See on Scoop.itBounded Rationality and Beyond

Abstract:      
As law and economics turns 40 years old, its continued vitality is threatened by its unrealistic core behavioral assumption: that people subject to the law act rationally. Professors Korobkin and Ulen argue that law and economics can reinvigorate itself by replacing the rationality assumption with a more nuanced understanding of human behavior that draws on cognitive psychology, sociology and other behavioral sciences, thus creating a new scholarly paradigm called “law and behavioral science”. This article provides an early blueprint for research in this paradigm. 

The authors first explain the various ways the rationality assumption is used in legal scholarship, and why it leads to unsatisfying policy prescriptions. They then systematically examine the empirical evidence inconsistent with the rationality assumption and, drawing on a wide-range of substantive areas of law, explain how normative policy conclusions of law and economics will change and improve under the law-and-behavioral-science approach. 

See on papers.ssrn.com

10
Nov
13

Heuristics and Biases at the Bargaining Table by Russell B. Korobkin, Chris Guthrie :: SSRN

See on Scoop.itBounded Rationality and Beyond

Abstract:      
In this essay, written for a symposium on The Emerging Interdisciplinary Cannon of Negotiation, we examine the role of heuristics in negotiation from two vantage points. First, we identify the way in which some common heuristics are likely to influence the negotiator’s decision-making processes. Namely, we discuss anchoring and adjustment, availability, self-serving evaluations, framing, the status quo bias, contrast effects, and reactive devaluation. Understanding these common heuristics and how they can cause negotiators’ judgments and choices to deviate from the normative model can enable negotiators to reorient their behavior so it more closely aligns with the normative model or, alternatively, make an informed choice to take advantage of the effort-conserving features of heuristics at the cost of the increased precision that the normative approach offers. Second, we explore how negotiators might capitalize on the knowledge that their counterparts are likely to rely on heuristics in their decision-making processes. We consider, in other words, how negotiators can exploit heuristic reasoning on the part of others for personal gain.

See on papers.ssrn.com

10
Nov
13

Heuristics and Biases at the Bargaining Table by Russell B. Korobkin, Chris Guthrie :: SSRN

See on Scoop.itBounded Rationality and Beyond

Abstract:      
In this essay, written for a symposium on The Emerging Interdisciplinary Cannon of Negotiation, we examine the role of heuristics in negotiation from two vantage points. First, we identify the way in which some common heuristics are likely to influence the negotiator’s decision-making processes. Namely, we discuss anchoring and adjustment, availability, self-serving evaluations, framing, the status quo bias, contrast effects, and reactive devaluation. Understanding these common heuristics and how they can cause negotiators’ judgments and choices to deviate from the normative model can enable negotiators to reorient their behavior so it more closely aligns with the normative model or, alternatively, make an informed choice to take advantage of the effort-conserving features of heuristics at the cost of the increased precision that the normative approach offers. Second, we explore how negotiators might capitalize on the knowledge that their counterparts are likely to rely on heuristics in their decision-making processes. We consider, in other words, how negotiators can exploit heuristic reasoning on the part of others for personal gain.

See on papers.ssrn.com

10
Nov
13

The Status Quo Bias and Contract Default Rules by Russell B. Korobkin :: SSRN

See on Scoop.itBounded Rationality and Beyond

.Abstract:      

The rich law and economics literature on contract default rules – that is, terms that govern relationships between contracting parties only if those parties do not explicitly agree to other terms – presumes that the legal system’s choice of default rules will not affect individual negotiators’ underlying preferences for contract terms. Judgment and decision making literature on the “status quo bias” suggests that if bargainers perceive default terms as part of the status quo they will prefer the substantive content of those terms more than they would if other terms were the legal defaults. This paper presents a study designed to test this hypothesis. 

151 law students were asked to provide advice to a client in a number of hypothetical contract negotiation scenarios with the content of the default terms manipulated between experimental groups. The results suggest that the choice of legal default terms affects not only what terms contracting parties will agree upon but also what terms they actually prefer. The paper presents the experimental results, considers various theoretical explanations for the results, and suggests how the results should impact legal scholars’ analysis of what contract default rules are optimally efficient.  
See on papers.ssrn.com




Time is real? I think not

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