Behavioral Economics

The interview with economist William Baumol, published in 2003 in weekly Respekt, deals with alternative activities for talented individuals. If they can't pursue productive activities (technological innovations) they go for rent-seeking activities or activities with negligible social return (e.g. chess). I also present a thesis, that if there is no sophisticated alternative activities, the talent may be redirected into pathological ones: psychopathy, neurosis, paranoia, psychosis... The article was exhibited in Holland Park, W8 6LU, The Ice House between 18. Oct - (...) 3. Nov. 2013. (shrink)

I am interested in the “rational irrationality hypothesis” about voter behavior. According to this hypothesis, voters regularly vote for policies that are contrary to their interests because the act of voting for them isn’t. Gathering political information is time-consuming and inconvenient. Doing so is unlikely to lead to positive results since one's vote is unlikely to be decisive. However, we have preferences over our political beliefs. We like to see ourselves as members of certain groups (e.g. “rugged individualists”) and being (...) part of those groups depends on having certain beliefs (e.g. about welfare spending). Even if a decrease in welfare spending would be bad for me, I might still benefit by believing in and, consequently, voting for a decrease since my vote is unlikely to make a difference but getting to see myself as a rugged individualist will make a noticeable difference to my wellbeing. It is sometimes argued that this hypothesis fails for empirical reasons. I will argue that things are worse: it is conceptually incoherent. I will do so by first showing that it is a rationalizing explanation and then argue that rationalizing explanations must be reflectively stable from the agent's perspective. The rational irrationality hypothesis is not. (shrink)

The Sure-Thing Principle famously appears in Savage’s axiomatization of Subjective Expected Utility. Yet Savage introduces it only as an informal, overarching dominance condition motivating his separability postulate P2 and his state-independence postulate P3. Once these axioms are introduced, by and large, he does not discuss the principle any more. In this note, we pick up the analysis of the Sure-Thing Principle where Savage left it. In particular, we show that each of P2 and P3 is equivalent to a dominance condition; (...) that they strengthen in different directions a common, basic dominance axiom; and that they can be explicitly combined in a unified dominance condition that is a candidate formal statement for the Sure-Thing Principle. Based on elementary proofs, our results shed light on some of the most fundamental properties of rational choice under uncertainty. In particular they imply, as corollaries, potential simplifications for Savage’s and the Anscombe- Aumann axiomatizations of Subjective Expected Utility. Most surprisingly perhaps, they reveal that in Savage’s axiomatization, P3 can be weakened to a natural strengthening of so-called Obvious Dominance. (shrink)

Nudge is a popular public policy tool that harnesses well-known biases in human judgement to subtly guide people’s decisions, often to improve their choices or to achieve some socially desirable outcome. Thanks to recent developments in artificial intelligence (AI) methods new possibilities emerge of how and when our decisions can be nudged. On the one hand, algorithmically personalized nudges have the potential to vastly improve human daily lives. On the other hand, blindly outsourcing the development and implementation of nudges to (...) “black box” AI systems means that the ultimate reasons for why such nudges work, that is, the underlying human cognitive processes that they harness, will often be unknown. In this paper, we unpack this concern by considering a series of examples and case studies that demonstrate how AI systems can learn to harness biases in human judgment to reach a specified goal. Drawing on an analogy in a philosophical debate concerning the methodology of economics, we call for the need of an interdisciplinary oversight of AI systems that are tasked and deployed to nudge human behaviours. (shrink)

The phenomenon of weakness of will – not doing what we perceive as the best action – is not recognized by neoclassical economics due to the axiomatic assumptions of the revealed preference theory (RPT) that people do what is best for them. However, present bias shows that people have different preferences over time. As they cannot be compared by the utility measurements, economists need to normatively decide between selves (short- versus long-term preferences). A problem is that neoclassical economists perceive RPT (...) as value-free and incorporate present bias within the economic framework. The axiomatic assumption that people do what is best for them leads to theoretical and practical dilemmas. This work examines weakness of will to resolve some shortcomings of RPT. The concept of intention is used to provide multiple self conception with the framework to decide between selves, which had not been done before. The paper concludes that individuals should not always follow their revealed preferences (desires) but the intentions (reason) because the latter indicates what people really want. (shrink)

This paper addresses the recent rise of the use of alternative medicine in Western countries. It offers a novel explanation of that phenomenon in terms of cognitive and economic factors related to the free-market and patient-centric approach to medicine that is currently in place in those countries, in contrast to some alternative explanations of this phenomenon. Moreover, the paper addresses this troubling trend in terms of the serious harms associated with the use of alternative medical modalities. The explanatory theory defended (...) here is then predicated on the idea that an extreme patient-centric model of medical practice that treats largely ignorant patients as consumers of medical products and services endowed with an essentially unrestricted power of freedom to choose treatments predictably leads serious and avoidable harms. Some important moral and epistemological consequences of this model are then articulated and corrective measures are suggested. (shrink)

The COVID-19 pandemic health protocols have adversely impacted the economic profit and business operations of micro, small, and medium enterprises (MSMEs). This study aimed to evaluate the business strategies employed by MSMEs as they are facing the public health crisis in Bato, Leyte, Philippines. A random sample of 200 MSMEs were surveyed using a structured questionnaire. Some descriptive statistics and Chi-square test for independence were used to summarize and determine the relationship among variables, respectively. Results showed that dominantly more of (...) the MSMEs are operated by owner-managers during the pandemic. On average, most (97.5%) of the enterprise operating are micro and operates for about 3 years. About 63.5% of the MSMEs during the pandemic has adopted a new strategies to cope with COVID-19’s negative impact and most of them are micro in nature. The major business strategies adopted to survive the adverse impact of the pandemic are as follows: following health protocols (50%), finding suppliers in nearby towns (33.8%), seeking alternative sources (26%), increasing prices of items sold (24.5%), and local outsourcing (22.5%), among others. It is concluded that age is a significant factor in implementing business strategies (p-value<0.019). This implies that owner-managers with higher age (average is 40 years old) are more likely to adopt business strategies. Moreover, as they are experiencing vulnerability to the pandemic such as economic profits being significantly reduced, then they are more likely to implement strategies (p-value<0.001). Short and long term plans are considered in order to survive and sustain its business operations. Hence, the study recommends that the government should help and enhance the capability of enterprises in managing risk as well as ensuring MSME’s continuity amidst the pandemic. (shrink)

Забезпечення енергетичної безпеки України в умовах гібридних загроз.

The European Union (EU) has been experiencing an unprecedented energy crisis for the last 50 years, with severe economic, social and political consequences. Rising energy demand, extreme weather events (unprecedented heat and long winters), disruptions in supply chain and poor regional and global reserves have all contributed to the current energy crisis in the EU. Prices on natural gas in the EU are rising as demand around the world increases. Prices on the gas rose by more than 800 percent year-on-year (...) and prices on the electricity by about 500 percent. Rising prices on gas are due to low stocks in European storage facilities and pressure from Russia, which is trying to speed up the launch of the Nord Stream-2 pipeline. Also in the EU, there is reduction the production of coal and natural gas, reducing the capacity of wind farms. As natural gas plays a significant role in shaping the prices on electricity, electricity has also risen in price. As prices on gas is rose, prices on oil and coal is rose significantly. Demand for energy consumption has also increased due to weather conditions – cold winters and periods of abnormal heat in summer. The largest consumers of gas and electricity in the EU are suffering heavy losses due to rising prices on energy. Industrial giants have begun to cut production, threatening economic recovery. The world economy is recovering from the crisis caused by the coronavirus pandemic, and the EU countries are increasingly in need of energy for industry and the population. An unbalanced transition to renewable energy has become a particular problem for the EU. Calmer weather this year has led to lower energy production using wind turbines. And old European nuclear power plants are gradually being decommissioned. Green energy is not able to cover all needs, so the continent has risen sharply demand on gas. All the above-mentioned problems have certainly affected the further ensure energy security of the EU and require the developing of appropriate mechanisms to overcoming current challenges. (shrink)

While nudging has garnered plenty of interdisciplinary attention, the ethics of applying it to climate policy has been little discussed. However, not all ethical considerations surrounding nudging are straightforward to apply to climate nudges. In this article, we overview the state of the debate on the ethics of nudging and highlight themes that are either specific to or particularly important for climate nudges. These include: the justification of nudges that are not self-regarding; how to account for climate change denialists; transparency; (...) knowing the right or best behaviours; justice concerns; and whether the efficacy of nudges is sufficient for nudges to be justified as a response to the climate crisis. We conclude that climate nudges raise distinct ethical questions that ought to be considered in developing climate nudges. (shrink)

Behavioural economics has taught us that human agents don't always display consistent, context-independent and stable preferences in their choice behaviour. Can we nevertheless do welfare economics...

The entire world community, since 2019, affected by the global pandemic COVID-19. The pandemic caused by this virus, led not only to significant human losses worldwide, but also imposed significant restrictions on the socio-cultural life of the population and radically changed the trends of the global economy and the further functioning of socio-economic systems. Now, huge economic losses have been recorded, which affected almost all sectors of the national economy and the state in the short, medium and long term. However, (...) it is important to consider individual economic development forecasts and measures developed by the governments of the world’s leading countries to overcome the negative effects of the COVID-19 pandemic. This will allow to form a real vision of the possible course of economic processes that will directly affect the living standards of the population and the restoration of socio-economic systems. To further restore the socio-economic system it is necessary to developing modern strategies and forecasts to ensure the effective functioning of economic entities through innovation, digitalization, marketing and use of competitive advantages in the consumer markets in conditions of limited resources, development promising sectors of the national economy, etc. The purpose of writing this scientific monograph is to substantiate the theoretical and methodological foundations, the formation new strategies for restoring socio-economic systems and overcoming the negative consequences of the caused by the COVID-19 pandemic, taking into account changes and challenges in the modern world. The object of the authors’ research is the process of forming new approaches, strategies and mechanisms for managing socio-economic systems in the context of the COVID-19 pandemic, eliminating the negative consequences in the activities of economic entities. The subject of research is socio-economic, organizational and institutional processes of formation and effective implementation of approaches, strategies and mechanisms for managing socio-economic systems; stabilization of the functioning of economic entities; introduction of innovative processes and digital technologies; implementation of best practices in the managing of socio-economic systems using world experience in various sectors of the economy caused by the COVID-19 pandemic. (shrink)

The current economic crisis caused by the COVID-19 pandemic has created new changes and challenges for society, which has led to a deeper identification of pressing problems and to develop strategies and models for overcoming crises in various countries, industries and businesses. The formation and improvement of modern strategies and models of crisis management is impossible without optimizing the resources of economic entities, providing assistance at various levels of government to support priority sectors of the economy, finding additional sources of (...) funding to combat the COVID-19 pandemic. To ensure the effective develop and implementation of modern strategies and models of crisis management it is necessary to have information about the state of economic entities, relevant commodity, raw materials, financial markets, explore the internal and external environment, determine the impact of risks on current activities business entities or industries. The effectiveness of crisis management strategies and models is determined by the ability of the management system to ensure the support of business activity of economic entities in the relevant market and to stimulate effective consumer demand. The purpose of writing this scientific monograph is to substantiate the theoretical and methodological foundations and to form and improve strategies and models of crisis management taking into account new changes and challenges for society related to the COVID-19 pandemic and declining business activity of economic entities. The object of the author’s research was the process of formation and improvement of crisis management strategies and models in the conditions of market imbalance and change of the external environment, reduction of activity volumes of economic entities, growth of budget expenditures to combat the COVID-19, formation of new forms of activities and penetration of information technology into various spheres of life to optimize the negative consequences of a pandemic. The subject of the study were socio-economic, organizational and institutional processes of formation and effective implementation of strategies and models of crisis management in various areas of economic activity; substantiation of mechanisms for ensuring the competitiveness of economic entities and the formation new forms of entrepreneurship; development of modern information technologies; consideration of best practices in business process management and digitalization using world experience in various sectors of the economy caused by the COVID-19. (shrink)

The article examines the process of formation inventory of the enterprise and determines the optimal volume of commodity resources for sale. A generalization of author’s approaches to the formation and evaluation of inventories of the enterprise is carried out. The marketing-logistic approach was applied for the purpose of distribution groups of commodity resources due to the risk of non-fulfillment the order for the supply of goods of the enterprise. In order to ensure an effective process of commodity provision of the (...) enterprises, the costs associated with the formation of inventories are determined. The formalized scheme of the formation commodity provision and the process of optimization inventory of the enterprise is offered. The analysis the structure of the company’s inventory is carried out, the volume of goods turnover is defined, the stocks are grouped for various clustering characteristics. To conduct the study, statistical information was used on commodity resources of the enterprises, statistical methods (grouping, structure analysis, estimation of dynamic series), tools for assessing the efficiency of inventory use, HML-FMR clustering were used. The necessity of using XYZ and ABC analysis is indicated in order to obtain more reliable results and forecast values of the product support of the enterprise. Economic-mathematical modeling is applied and graphically shown the difference in the formation of commodity resources by various features of HML-FMR clustering. The calculations allow the enterprise to determine the optimal amount of commodity resources in accordance with the needs of consumers and their solvent demand, to plan financial resources for the formation of inventories, to develop assortment policy in accordance with demand for products and their implementation. The results of calculations the volume of merchandising of the enterprise, taking into account the HML-FMR clustering affect the formation of final financial performance of the enterprise — income and profits. (shrink)

Before pandemic the world economy had a pre-crisis situation which was characterized by unprecedented imbalances in the global financial and economic system, the lack of growth in world GDP, which posed a real threat to the world economic order. Almost all global analysts predicted a global economic crisis at the end of 2019. For the first time since time immemorial, bank interest rates in all countries have dropped to unprecedented low levels. Often interest rates were 0% or even negative. The (...) EU’s financial system has been so disfigured by the VAT tax that fraud with this tax has reached a scale far exceeding hundreds of billions EUR and in fact got out of control of the authorities. (shrink)

Purpose: To develop proposals on the directions of institutional support for the processes of creativity of the Ukrainian economy. Design/methodology/approach: The analysis of trends in the creativity of the Ukrainian economy is carried out and proposals are developed for conceptualizing institutional support for these processes. The authors set out to develop proposals for institutional support for creativity processes and offer recommendations for systematic updating of Ukrainian legislation in the areas of state regulation of high-tech business. The information base was the (...) information materials of the State Statistics Service of Ukraine, Ministry of Economic Development and Trade of Ukraine, the statistical databases of the European Commission, OECD and World Bank for the period 2014–2020. The research methodology is based on scientific tools that include comparative analysis and economic and mathematical modeling. Findings: Building a national program of public investment in creative development will allow us to systematically approach the issue of institutional support for technological breakthroughs. Research limitations/implications: Recommendations on the development and improvement of legislative instruments of deregulatory policy, harmonization with European standards are substantiated. Directions of systematic updating of legislation on guaranteeing foreign investment of creative projects and targeted investment of joint research projects of academic science and creative organizations are proposed. The implementation will allow a systematic approach to the issue of institutional support for the technological breakthrough of Ukraine. Originality/value: There is a need to step up institutional activities in the field of organizing research centers, introduce targeted investment in the academic science and research activity of creative organizations. (shrink)

Nudging is the idea that people’s decisions should be influenced in predictable, non-coercive ways by making changes to the way that options are presented to them. Central to the debate about nudging is the question of whether it is morally permissible to intentionally nudge others. Libertarian paternalists maintain that this can be the case. In this paper, I present the libertarian paternalistic criteria for the moral permissibility of intentional nudges. Having done this, I motivate two objections. The first one targets (...) the moral permissibility of nudging in general. The second one targets the moral permissibility of only a subset of nudges. After evaluating both of these objections, I conclude that although they are unsuccessful, the evaluation of The Manipulation Objection shows that the libertarian paternalistic criteria for the moral permissibility of intentional nudges fails. I end by suggesting a possible revision to the criteria that avoids the problem, considering its limitations, and providing examples of its applications. (shrink)

Given the endowment effect, the role of attention in decision-making, and the framing effect, most behavioral economists agree that it would be a mistake to accept the satisfaction of revealed preferences as the normative criterion of choice. Some have suggested that what makes agents better off is not the satisfaction of revealed preferences, but ‘true’ preferences, which may not always be observed through choice. While such preferences may appear to be an improvement over revealed preferences, some philosophers of economics have (...) argued that they face insurmountable epistemological, normative, and methodological challenges. This article introduces a new kind of true preference – values-based preferences – that blunts these challenges. Agents express values-based preferences when they choose in a manner that is compatible with a consumption plan grounded in a value commitment that is normative, affective, and stable for the agent who has one. Agents who choose according to their plans are resolute choosers. My claim is that while values-based preferences do not apply to every choice situation, this kind of preference provides a rigorous way for thinking about classic choice situations that have long interested behavioral economists and philosophers of economics, such as ‘Joe-in-the-cafeteria.’. (shrink)

Today, dramatically increasing economic inequality, imminent climatological calamity, and a global pandemic now place the timeless debate over capitalism into stark relief. Though many seek to pin the blame on capitalism’s excesses, they would do well to recall the historical record of socialism’s deficiencies, namely, stifling innovation, lumbering inefficiency, and stagnation. Fortunately, our moral psychology affords a middle way between these two extremes. For while economic incentives have a tendency to let our civic and prosocial impulses atrophy from disuse, these (...) can also be rekindled when we are faced with highly compelling reasons to think and act for the greater good of all concerned. The coronavirus pandemic now unfolding might well offer us an opportunity to instill a culture of heightened moral self-awareness spurring a more virtuous form of capitalism. (shrink)

Nudging is the idea that people’s decisions and behaviors can be influenced in predictable, non-coercive ways by making small changes to the choice architecture. In this paper, I differentiate between type-1 nudges and type-2 nudges according to the thinking processes involved in each. With this distinction in hand, I present the libertarian paternalistic criteria for the moral permissibility of intentional nudges. Having done this, I motivate an objection to type-1 nudges. According to this objection, type-1 nudges do not appear to (...) be relevantly different than standard cases of manipulation, and manipulation is morally problematic. While I show that this objection fails, I argue that its evaluation raises a different challenge for Libertarian Paternalism. The libertarian paternalistic criteria fails because it ignores the moral distinction that exists between different kinds of nudges. That is, the distinction between what I call ‘counteractive’ and ‘non-counteractive’ nudges. I end by suggesting a revision of the criteria that avoids the problem. (shrink)

In this paper, I investigate the betting behavior of a decision-maker who can influence the likelihood of the events upon which she is betting. In decision theory, this is best known as a situation of moral hazard. Focusing on a particularly simple case, I sketch the first systematic analysis of moral hazard in the canonical Savage framework. From the results of this analysis, I draw two philosophical conclusions. First, from an observational and a descriptive point of view, there need to (...) be no incompatibility between moral hazard and the Savage framework. This qualifies the incompatibility view, that is ubiquitous in decision theory. Second, in general, moral hazard is not sufficient to overcome the challenges posed by state-dependent utility to the behavioral identification of beliefs. This qualifies the sufficiency view, that is influential in decision theory. These two philosophical conclusions are the main contributions of my paper. (shrink)

Potential of sustainable regional development is studied through demographic, economic, social, socio-cultural and ecological indicators in order to determine the strategy development areas of regional SMART specialisation on the example of Cherkasy oblast (the central region of Ukraine).Cherkasy oblast was selected for the study because it is one of the pilot regions for the implementation of the SMART specialisation strategies. The following methods were used in the course of the study: the system-structure analysis, comparative-geographic method, mapping (GIS – MapInfo Professional, (...) Surfer Golden Software, and program for gravity modelling of the potential field calculation), interpolation, correlation and description-statistical method.The results of the study are intended for national and regional policy-makers, representatives of self-governance, researchers dealing with regional development problems, NGOs, representatives of small and medium business, public activists and others.The proposed results of the study of the sustainable regional development potential in view of SMART specialisation on the example of Cherkassy oblast may be used in the countries of the Eastern Partnership (Belarus, Georgia, Moldova, Azerbaijan, Armenia). (shrink)

The problem of corruption in Ukraine has been examined, as well as Blockchain technology application feasibility in combating the phenomenon has been analyzed in the article. Blockchain instrumental features and properties, making the technology unique and determining its potential applications in many sectors of the economy, have been covered with much attention. The authors have analyzed both advantages and obstacles for a distributed data registry implementation. Analysis of benchmarks and application of the best practices of Blockchain technology in the public (...) sector, including the fiscal process, have been presented in the study. Profound interest in exploring the technology feasibility has been emphasized on the part of the world's leading governments. Information on pilot Blockchain projects in the public sector of Ukraine has been presented. The article focuses on the fact that alongside with the technology area and ways of scaling its application, a new era of digital society development is emerging. (shrink)

There is growing concern that a global economic system fueled predominately by financial incentives may not maximize human flourishing and social welfare externalities. If so, this presents a challenge of how to get economic actors to adopt a more virtuous motivational mindset. Relying on historical, psychological, and philosophical research, we show how such a mindset can be instilled. First, we demonstrate that historically, financial self-interest has never in fact been the only guiding motive behind free markets, but that markets themselves (...) are representations of our individual and collective moral identities. Building on this understanding, we review the research on how economic incentives crowd out virtue-oriented concerns. We then introduce the concept of moral self-awareness (MSA), an evolving mindset informed by reflection on moral identity, namely what one’s actions say about oneself given the impacts on others or society that one’s action may effect. MSA comprises three fundamental aspects of virtue-oriented reasoning: pride, shame, and guilt. Finally, we offer a four-stage model anchored in systems theory, yielding ever more refined motivating strategies for maximizing human flourishing and social welfare externalities. (shrink)

Авторами розглянуті умови соціалізації споживання коміксів у мікросоціальному масштабі, що дає змогу описати особливості формування та розвитку різноманітних поведінкових моделей попиту на даний продукт сучасної культури. Запропоновано доповнити сегментацію споживачів коміксів такими критеріями як схильність до домінантного формату читання та потенційні умови перегляду домінантного формату читання. Ключові слова: комікс, варіативність моделей споживання, суспільство, постмодернізм, соціальна комунікація. -/- Авторами рассмотрены условия социализации потребления комиксов в микросоциальном масштабе, что позволяет описать особенности формирования и развития разнообразных поведенческих моделей спроса на данный продукт современной (...) культуры. Предложено дополнить сегментацию потребителей комиксов такими критериями как склонность к доминантному формату чтения и потенциальные условия пересмотра доминантного формата чтения. Ключевые слова: комикс, вариативность моделей потребления, общество, постмодернизм, социальная коммуникация. -/- The authors examined the conditions for the socialization of the comics consumption in the micro-social scale, which allows us to describe the characteristics of the formation and development of various behavioral patterns of demand for this product of modern culture. We have proposed to supplement the segmentation of comics consumers with such criteria as the propensity for the dominant reading format and the potential conditions for revising the dominant reading format. Keywords: comics, variability of consumption patterns, society, postmodernism, social communication. (shrink)

One of the explanations for the Great Crisis of 2007-2008 was that financial authorities should have issued stricter regulations to prevent the housing bubble. However, according to Alan Greenspan, President of the Federal Reserve System (FED) from 1987 to 2006, this is to judge with hindsight. No one can guess when a “bubble” begins, nor when it ends; they happen because of the “irrational exuberance” in investors’ behavior, which causes boom and bust cycles. Regulators are not in a better situation (...) for assessing risks, though: since market participants supposedly know their own risks better than the regulator (a kind of informational asymmetry), an intervention (except to ensure law-enforcement) would imply unjustified paternalism. However, a regulator does not have to be conceived as a paternalistic authority. We sketch an objection to Greenspan's argument, arguing that crises don’t require a defective reasoning such as the “irrational exuberance” – our usual bounded rationality might be enough to provide the kind of “self-fulfilling prophecy” observed in the rise and fall of bubble assets value. Given the possibility of grave externalities, authorities are justified in adopting measures to ensure investors behave in a prudent way, even if they supposedly know better their own risks. (shrink)

This article intends to analyze the performance and the efficiency of companies and to identify the key factors that may explain it. It was selected a sample with 15 enterprises: 7 Portuguese and 8 Ukrainian ones, belonging to several industries. Financial and non-financial data was collected for 6 years, during the period of 2009 to 2014. Research questions that guided this work were: Are the enterprises efficient/profitable? What factors influence enterprises’ efficiency/performance? Is there any difference between Ukrainian and Portuguese enterprises’ (...) efficiency/performance, which factors have more influence? Which industrial sector is represented by more efficient/profitable enterprises? The main results showed that in average enterprises were efficient with low level of profitability. According to gained results several indicators were highlighted so that companies would pay more attention to them. (shrink)

Abstract: We examine how trustworthy behaviour can be achieved in the financial sector. The task is to ensure that firms are motivated to pursue long-term interests of customers rather than pursuing short-term profits. Firms’ self-interested pursuit of reputation, combined with regulation, is often not sufficient to ensure that this happens. We argue that trustworthy behaviour requires that at least some actors show a concern for the wellbeing of clients, or a respect for imposed standards, and that the behaviour of these (...) actors is copied in such a way that it becomes a behavioural norm. We briefly suggest what such behavioural norms might need to be if trustworthy behaviour is to be achieved, and consider how they might be supported; we describe the research that is necessary in order to understand these norms in more detail. We argue that the norms of traders are different from the norms of those engaged in other activities, since they are inevitably self-interested, and we consider the risk that traders’ norms might undermine those of other actors. We analyse the task for governance in dealing with this problem, and the role which leadership by a corporate board and management might play in doing this. We describe the need for further research in to describe how this might be done. (shrink)

The article deals with a new financial tool of attracting capital, known as Initial Coin Offering (ICO). In conditions of reduced banking lending and difficult access to finance for SMEs, ICO is viewed to be one of the possible ways to access capital. It considers the main advantages and disadvantages of ICO performance, including its typical features, challenges and regulatory approaches to tax regulation, cybersecurity. The authors of the article determine stages of the ICO mechanism, identifying potential risks and ways (...) to mitigate them, focusing primarily on the need to control and regulate ICO projects. The authors identify the main types of ICO funding, including hybrid and pure funding. The research contains an analysis of ICO trends and their duration for the period of 2013-2017. The capital raised through ICO performance over the period of 2013-2017 is analysed, and determination of the exponential trend line showing the level of its approximation is determined. The study covers the territorial distribution of ICO, in which the top positions regarding the amount of capital raised by ICO are attributed to the USA and EU member states. The existence of ICO regulation in European countries, such as Switzerland and UK, was defined positive in terms of further development of the relevant regulation in the financial market. The article considers the best ICO practices in EU member states. To mitigate risks relating to ICO performance and to increase the level of investment, it would be reasonable to create regulatory rules in every country where cases of ICO performance are reported, based on the practice of the mentioned European countries. The authors give recommendations regarding ICO regulation in Ukraine, taking into consideration the relevant European experience. (shrink)

The article analyzes and presents the results of international experience of integration development in the field of tourism and hospitality, modern and efficient methods of integration in the field of tourism. The effective ways of realization of integration development programs at tourist enterprises and hotel chains are determined. The main objectives of integration processes in the field of tourism are also defined. The analysis of the most famous multinational tour operators and the largest hotel chains in the world in the (...) form of a table and graph is shown. The processes that take place at the expense of integration processes in the tourism business are analyzed and identified. A promising direction for further research is the economic feasibility of the feasibility of international integration in the tourism sector and ways to improve the strategies of integration management. (shrink)

Currently, under the conditions of permanent financial risks that hamper the sustainable economic growth in the financial sector, the development of evaluation and risk management methods both regulated by Basel II and III and others seem to be of special importance. The reputation risk is one of significant risks affecting reliability and credibility of commercial banks. The importance of reputation risk management and the quality of their assessment remain relevant as the probability of decrease in or loss of business reputation (...) influences the financial results and the degree of customers’, partners’ and stakeholders’ confidence. By means of imitating modeling based on Bayesian Networks and the fuzzy data analysis, the article characterizes the mechanism of reputation risk assessment and possible losses evaluation in banks by plotting normal and lognormal distribution functions. Monte-Carlo simulation is used to calculate the probability of losses caused by reputation risks. The degree of standardized histogram similarity is determined on the basis of the fuzzy data analysis applying Hamming distance method. The tree-like hierarchy based on the OWA-operator is used to aggregate the data with Fishburne's coefficients as the convolution scales. The mechanism takes into account the impact of criteria, such as return on equity, goodwill value, the risk assets ratio, the share of the productive assets in net assets, the efficiency ratio of interest bearing liabilities, the risk ratio of credit operations, the funding ratio and reliability index on the business reputation of the bank. The suggested methods and recommendations might be applied to develop the decision-making mechanism targeted at the implementation of reputation risk management system in commercial banks as well as to optimize risk management technologies. (shrink)

Nudge is a concept of policy intervention that originates in Thaler and Sunstein's (2008) popular eponymous book. Following their own hints, we distinguish three properties of nudge interventions: they redirect individual choices by only slightly altering choice conditions (here nudge 1), they use rationality failures instrumentally (here nudge 2), and they alleviate the unfavourable effects of these failures (here nudge 3). We explore each property in semantic detail and show that no entailment relation holds between them. This calls into question (...) the theoretical unity of nudge, as intended by Thaler and Sunstein and most followers. We eventually recommend pursuing each property separately, both in policy research and at the foundational level. We particularly emphasize the need of reconsidering the respective roles of decision theory and behavioural economics to delineate nudge 2 correctly. The paper differs from most of the literature in focusing on the definitional rather than the normative problems of nudge. (shrink)

The article provides the analysis of the entrance into the innovative activity and organized regulation of interaction which is based on the scientific and technological changes, concentration of production and the feasibility study of administrative decisions, which are dominated by a conglomerate of technical, technological and engineering management decisions. The research formulates the provisions for the productive use of business as the form of economic relations which is based on the entrepreneur function. These provisions are formulated basing on the conditions (...) of efficient division of labour and cooperation. The research singles out a number of systemic positions which allow perceiving logically and distinguishing the production, service and business, to distribute human activities between the groups of occupations and types of service activities. Among these systemic provisions the most efficient is a modelling approach which, when the society enters more complex social and economic stage, transfers the science from the environment of operations with the bulk characteristics into the environment of the analysis of specific sets of coefficients. The logistics of Ukraine’s joining the process of business is associated with the position of the recognition of the primacy of the physical abilities of the person, which should be developed in part in the system of public security and partly in the business environment, commercialization and private capital. Person enters the business environment and habitat as an initiative individual. These indicators are the following: «connections» between the old and the new, between the objects which exist and those which only start to appear and will exist in future; «sources» of development, movement, changes; «mechanism» of development, ways of changing from old to new quality; «direction» of development; «style» of thinking, understanding reality; «essence» of true knowledge; «essence itself» of cognition; «alternativeness» of metaphysics and dialectics. (shrink)

In Southeast Asian countries (SEA), road transport accounts for the main energy consumption and CO2 emission. Air pollution is a major concern in densely populated cities such as Bangkok, Manila, and Kuala Lumpur. The main objective of this paper is to give insights on trends of transport development, car ownership, and CO2 emissions in Southeast Asia. This study also attempts to review the successful transportation policies around the globe and to introduce the possible instruments that can help reduce air pollution (...) in Southeast Asian countries. Economic instruments to estimate the benefits of a cleaner environment due to new policies are introduced as well. The results of this research could help policy makers consider approaches that could internalize external costs of transportation and maximize the societal welfare. (shrink)

Behaviourism is the view that preferences, beliefs, and other mental states in social-scientific theories are nothing but constructs re-describing people's behaviour. Mentalism is the view that they capture real phenomena, on a par with the unobservables in science, such as electrons and electromagnetic fields. While behaviourism has gone out of fashion in psychology, it remains influential in economics, especially in ‘revealed preference’ theory. We defend mentalism in economics, construed as a positive science, and show that it fits best scientific practice. (...) We distinguish mentalism from, and reject, the radical neuroeconomic view that behaviour should be explained in terms of brain processes, as distinct from mental states. (shrink)

We introduce a “reason-based” framework for explaining and predicting individual choices. It captures the idea that a decision-maker focuses on some but not all properties of the options and chooses an option whose motivationally salient properties he/she most prefers. Reason-based explanations allow us to distinguish between two kinds of context-dependent choice: the motivationally salient properties may (i) vary across choice contexts, and (ii) include not only “intrinsic” properties of the options, but also “context-related” properties. Our framework can accommodate boundedly rational (...) and sophisticatedly rational choice. Since properties can be recombined in new ways, it also offers resources for predicting choices in unobserved contexts. (shrink)

Choice experiment (CE) is a questionnaire based method that the accuracy of research questionnaire determines the validity of the research outcomes. Attribute selection has a prime importance in every CE studies. If respondents do not understand or do not have preference for a certain attribute, the attribute non-attendance problem might happen that biases overall results of the research. Qualitative approaches such as literature review, focus group discussion, and in depth discussion commonly applied in CE researches. However, especially in the developing (...) countries context where ethnical and cultural diversity is a challenge in conducting survey based questionnaires, qualitative methods are not sufficient in selecting attributes. Present study investigates the application of relative importance index (RII) in respondents¡¯ preference for attributes in a modal shift study in Klang Valley, Malaysia. The 5 point Likert scale questions were employed to enhance respondents¡¯ preferences for initial 24 selected attributes. The results of this study showed that from 24 pre-selected attributes, only 18 of them had RII>0.5 and could be included in the final CE design. The results of this study could help researchers to control for unobserved problems in selecting the attributes which could not be discovered through qualitative approaches. -/- . (shrink)

Financial sustainability of protected areas is one of the main challenges of management. Financial self-sufficiency is an important element in improving conservation effort in these areas. This study seeks to review best practices in recreational fee systems in different countries and to find a relevant entry fee for a wildlife sanctuary in Malaysia. The revenue of the National Elephant Conservation Center (NECC) in Kuala Gandah, Malaysia, comes from several sources, including the national government, but all these budgetary sources are strained (...) by tighter public budgets and greater demands. The present study investigates the introduction of visitor entrance fees to supplement an otherwise inadequate budget for supporting the operational costs of the sanctuary. Factor analysis and a double-bounded contingent valuation method were combined to estimate tourists' willingness to pay (WTP) the proposed entrance fee. Factor analysis showed that respondents' motivation to support the NECC with user fees is conditioned by their direct experiences with elephants, their satisfaction with NECC's educational programs and services, and other experiences it gives to users. The WTP model considered respondents' four motivation factors with their sociodemographic characteristics. Since NECC visitors arrive from both within and outside the country, this study suggests to center managers a two-tier fee structure (residents vs. nonresidents of Malaysia), based upon mean WTP estimates. This study further suggests that revenue from such an entrance fee for NECC could support the Center's management and development costs. © 2015 Elsevier B. (shrink)

This paper discusses the validity of nudges to tackle time-inconsistent behaviours. I show that libertarian paternalism is grounded on a peculiar model of personal identity, and that the argument according to which nudges may improve one’s self-assessed well-being can be seriously questioned. I show that time inconsistencies do not necessarily reveal that the decision maker is irrational: they can also be the result of discounting over the degree of psychological connectedness between our successive selves rather than over time. Time inconsistency (...) can call for paternalism if and only if we accept that an individual is characterised by stable “true” preferences over time-dependent outcomes, and that she is rationally required to make time-consistent choices. This model is descriptively and normatively questionable. I then argue that behavioural findings may still justify paternalistic interventions, but on a non-welfarist basis. (shrink)

It is widely held that the influence of risk on rational decisions is not entirely explained by the shape of an agent’s utility curve. Buchak (Erkenntnis, 2013, Risk and rationality, Oxford University Press, Oxford, in press) presents an axiomatic decision theory, risk-weighted expected utility theory (REU), in which decision weights are the agent’s subjective probabilities modified by his risk-function r. REU is briefly described, and the global applicability of r is discussed. Rabin’s (Econometrica 68:1281–1292, 2000) calibration theorem strongly suggests that (...) plausible levels of risk aversion cannot be fully explained by concave utility functions; this provides motivation for REU and other theories. But applied to the synchronic preferences of an individual agent, Rabin’s result is not as problematic as it may first appear. Theories that treat outcomes as gains and losses (e.g. prospect theory and cumulative prospect theory) account for risk sensitivity in a way not available to REU. Reference points that mark the difference between gains and losses are subject to framing, many instances of which cannot be regarded as rational. However, rational decision theory may recognize the difference between gains and losses, without endorsing all ways of fixing the point of reference. In any event, REU is a very interesting theory. (shrink)

Neuroeconomics is a research programme founded on the thesis that cognitive and neurobiological data constitute evidence for answering economic questions. I employ confirmation theory in order to reject arguments both for and against neuroeconomics. I also emphasize that some arguments for neuroeconomics will not convince the skeptics because these arguments make a contentious assumption: economics aims for predictions and deep explanations of choices in general. I then argue for neuroeconomics by appealing to a much more restrictive (and thereby skeptic-friendly) characterization (...) of the aims of economics. (shrink)

To nudge is to design choice contexts in order to improve choice outcomes. Richard Thaler and Cass Sunstein emphatically endorse nudging but reject more restrictive means. In contrast, I argue that the behavioral psychology that motivates nudging also motivates what may be called jolting — i.e. the design of choice content. I defend nudging and jolting by distinguishing them from the sometimes oppressive means with which they can be implemented, by responding to some common arguments against nudging, and by showing (...) how respect for preferences over option sets and their aggregate properties may require the trimming of option sets, as well as helpful choice contexts. (shrink)

Cass Sunstein and Richard Thaler's proposal that social and legal institutions should steer individuals toward some options and away from others-a stance they dub "libertarian paternalism"-has provoked much high-level discussion in both academic and policy settings. Sunstein and Thaler believe that steering, or "nudging," individuals is easier to justify than the bans or mandates that traditional paternalism involves. -/- This Article considers the connection between libertarian paternalism and the regulation of reproductive choice. I first discuss the use of nudges to (...) discourage women from exercising their right to choose an abortion, or from becoming or remaining pregnant. I then argue that reproductive choice cases illustrate the limitations of libertarian paternalism. Where choices are politicized or intimate, as reproductive choices often are, nudges become not much easier to justify than traditional mandates or prohibitions. Even beyond the context of reproductive choice, it is not obvious how much easier nudges are to justify than bans or mandates. -/- Part I of this Article briefly introduces Sunstein and Thaler's libertarian paternalism. Part II then turns to the context of reproductive choice. Part II.A reviews restrictions on the right to choose an abortion-particularly post-Casey regulations such as waiting periods, requirements that women receive certain types of information, and requirements that women undergo ultrasound-that pitch themselves as steering choice without entirely closing off the right to choose an abortion. This distinction between nudges and prohibitions echoes Sunstein and Thaler's proposals, but works to subordinate women's choices to the judgment of (often male) experts and administrators-hence my term "libertarian patriarchalism." Part II.B reviews efforts to nudge women-particularly teenagers, HIV-positive women, and others thought to be unsuitable mothers-to avoid pregnancy. -/- Part III considers the normative implications of nudging reproductive decisions. In Part III.A, I argue that the political nature of reproductive choices presents a problem for nudges. I do so by considering a parallel with voting rights. Empirical research shows that voters are more likely to choose the candidate listed first on the ballot. Yet we do not empower the administrator in charge of ballot design to choose a default rule that nudges individuals toward the candidate he sincerely believes would promote choosers' welfare. Given the political nature of reproductive choices, a policymaker's attempting to nudge reproductive decisionmaking in the direction he prefers-or indeed in any direction-fails to show adequate respect for the chooser's agency. In Part III.B, I offer an argument that targets the use of nudges in the context of pregnancy. Finally, in Part III.C, I argue that nudges do not merely add choices to an existing menu, but change the substantive choices available to individuals and thereby impose more-than-trivial costs on them. I conclude by exploring the implications of my arguments for nudges more generally. (shrink)

Recent work in the behavioral sciences asserts that we are subject to a variety of cognitive biases. For example, we mourn losses more than we prize equivalently sized gains; we are more inclined to believe something if it matches our previous beliefs; and we even relate more warmly or coldly to others depending on whether the coffee cup we are holding is warm or cold. Drawing on this work, case law and legal scholarship have asserted that we have reason to (...) select legal norms, or revise existing norms, so as to eliminate the influence of these and other cognitive biases. -/- In this Article, I critically evaluate whether and when this reaction is warranted. I begin by contrasting predominantly descriptive definitions of bias, on which bias is merely deviation from a predictive model, with prescriptive definition of bias, on which biased conduct is conduct that actors ought not do. I then similarly contrast the behavioral-scientific concepts of statistical significance and effect size with the concept of significance required to justify legal conclusions. -/- With this apparatus in place, I go on to consider a variety of examples where legal commentators and decisionmakers have worried about the effects of cognitive bias on law. I argue that many of these cognitive biases (for example, our aversion to losses), while reflecting deviations from behavioral scientists’ models of human behavior, are not normatively objectionable and so give us no reason to revise our legal norms to eliminate their effect. Others (e.g., the effect of judges’ hunger on their decisionmaking), however, constitute biases under both descriptive and prescriptive definitions and therefore give us good reason to revise our legal norms. -/- I conclude by contrasting my conclusion — that evaluation of cognitive biases’ legal significance must explicitly evaluate the normative arguments for and against the model of decisionmaking in question on a case-by-case basis — with the arguments of influential scientists and legal commentators like Daniel Kahneman and John Mikhail, who treat cognitive heuristics and biases as more broadly desirable or objectionable. (shrink)

In a number of recent publications, Cass Sunstein and Richard Thaler have argued for a novel approach to the design of public policy. Their proposal has received a great deal of attention, both within academic circles and the public at large. Drawing upon evidence from behavioral economics and empirical psychology, the authors attempt to demonstrate that the conventional antagonism between libertarians and paternalists within political theory dissolves in conditions that obtain widely in public decision-making. Where free choice and the promotion (...) of individual welfare can coexist, the authors believe that designers of public policy ought to be libertarian paternalists. In this paper I criticize their proposal on grounds that the authors are unable to sufficiently motivate the paternalistic element of their approach. I argue that the empirical evidence cited by the authors is capable of supporting a number of competing approaches, including what I call libertarian utilitarianism and libertarian justice. Since the evidence that the authors draw upon does not provide us any grounds for selecting between these rival approaches, I conclude that Sunstein and Thaler are unable to provide us with a convincing guide for the design of public policy. In order to show that this is the case, I consider three arguments in favor of libertarian paternalism, and find each lacking. I end with some comments about what we can properly conclude on the basis of Sunstein and Thaler’s arguments. (shrink)

Проблеми взаємовпливу та взаємозв'язку економіки і культури складні й різноманітні, тому є теоретично й практично актуальними: без глибокого вивчення і методологічного та інституціонального визначення їх ролі неможливо зрозуміти сутність сучасних тенденцій в глобалізованому економічному процесі і нові тенденції суспільного середовища. Метою статті є дослідження впливу на інноваційний розвиток країни економічної культури суспільства. В Україні внаслідок слабкої взаємодії науки і бізнесу розвиток системи трансферу технологій відбувається повільно. Через недостатнє розповсюдження прогресивних технологій країна втрачає можливість використання інноваційного потенціалу в пріоритетних напрямах НТП, (...) що призводить до використання екстенсивної моделі розвитку економіки. Стан економіки відображає той рівень культури, який може репрезентувати окремий індивід і все суспільство в цілому. Визначаючи політику економічного розвитку нашої країни, та конкретні кроки економічних реформ слід також враховувати особливості економічної культури, що історично склалася, як підґрунтя, на якому має формуватися система трансферу технологій в Україні. -/- . (shrink)

There is a surprising disconnect between formal rational choice theory and philosophical work on reasons. The one is silent on the role of reasons in rational choices, the other rarely engages with the formal models of decision problems used by social scientists. To bridge this gap, we propose a new, reason-based theory of rational choice. At its core is an account of preference formation, according to which an agent’s preferences are determined by his or her motivating reasons, together with a (...) ‘weighing relation’ between different combinations of reasons. By explaining how someone’s preferences may vary with changes in his or her motivating reasons, our theory illuminates the relationship between deliberation about reasons and rational choices. Although primarily positive, the theory can also help us think about how those preferences and choices ought to respond to normative reasons. (shrink)

This paper argues that private property and rights assignment, especially as applied to communication infrastructure and information, should be informed by advances in both technology and our understanding of psychology. Current law in this area in the United States and many other jurisdictions is founded on assumptions about human behavior that have been shown not to hold empirically. A joint recognition of this fact, together with an understanding of what new technologies make possible, leads one to question basic assumptions about (...) how law is made and what laws we should have in a given area, if any. I begin by analyzing different aspects of U.S. law, from a high-level critique of law making to a critique of rights assignment for what I call 'simple nonrival goods.' I describe my understanding, as a non-lawyer with a background in psychology and computing, of the current conventions in U.S. law, consider the foundational assumptions that justify current conventions, describe advances in psychology and technology that call these conventions into question, and briefly note how the law might normatively change in this light. I then apply this general analysis to the question of domain name assignment by the Internet Corporation for Assigned Names and Numbers (ICANN). (shrink)

A framing effect occurs when an agent's choices are not invariant under changes in the way a decision problem is presented, e.g. changes in the way options are described (violation of description invariance) or preferences are elicited (violation of procedure invariance). Here we identify those rationality violations that underlie framing effects. We attribute to the agent a sequential decision process in which a “target” proposition and several “background” propositions are considered. We suggest that the agent exhibits a framing effect if (...) and only if two conditions are met. First, different presentations of the decision problem lead the agent to consider the propositions in a different order (the empirical condition). Second, different such “decision paths” lead to different decisions on the target proposition (the logical condition). The second condition holds when the agent's initial dispositions on the propositions are “implicitly inconsistent,” which may be caused by violations of “deductive closure.” Our account is consistent with some observations made by psychologists and provides a unified framework for explaining violations of description and procedure invariance. (shrink)

Mental accounting is a concept associated with the work of Richard Thaler. According to Thaler, people think of value in relative rather than absolute terms. They derive pleasure not just from an object’s value, but also the quality of the deal – its transaction utility (Thaler, 1985). In addition, humans often fail to fully consider opportunity costs (tradeoffs) and are susceptible to the sunk cost fallacy. Why are people willing to spend more when they pay with a credit card than (...) cash (Prelec & Simester, 2001)? Why would more individuals spend $10 on a theater ticket if they had just lost a $10 bill than if they had to replace a lost ticket worth $10 (Kahneman & Tversky, 1984)? Why are people more likely to spend a small inheritance and invest a large one (Thaler, 1985)? According to the theory of mental accounting, people treat money differently, depending on factors such as the money’s origin and intended use, rather than thinking of it in terms of the “bottom line” as in formal accounting (Thaler, 1999). An important term underlying the theory is fungibility, the fact that all money is interchangable and has no labels. In mental accounting, people treat assets as less fungible than they really are. Even seasoned investors are susceptible to this bias when they view recent gains as disposable “house money” (Thaler & Johnson, 1990) that can be used in high-risk investments. In doing so, they make decisions on each mental account separately, losing out the big picture of the portfolio. (See also partitioning and pain of paying for ideas related to mental accounting.) . (shrink)