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Decision-making under risk, betting
Herold, Martin ; Hlaváček, Jiří (advisor) ; Pěkná, Martina (referee)
The volume of money bet on the Czech market already exceeded one hundred billion and continues to increase. Therefore, the demand for relevant analysis concerning behaviour of players grows. This thesis aims to study decision making under risk in the environment of gambling and illuminates the discrepancies, provided risk averse consumers are the bettors. The thesis asks the question why people are willing to participate in games with negative expected value and what is their real motivation for gambling, what phenomena determine their view on betting opportunity and how they cope with theoretical models. The theoretical part focuses on existing models of decision making under risk theory and critically evaluates their ability to plausibly reflect reality. Consequently, models such as the expected value, expected utility and prospect theory are introduced, including other basic concepts. In the second section, socioeconomic determinants of player's behaviour are evaluated, improving expected utility theory. In the final section, the thesis demonstrates gathered evidence and possible improvements of the prospect theory model. Although conclusions are not unequivocal, the work provides a comprehensive insight into the utility theory and decision making under risk in an environment of betting.
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Risk appetite estimation on financial markets
Fidler, Vojtěch ; Geršl, Adam (advisor) ; Babin, Adrian (referee)
The thesis studies role of risk appetite on financial markets. In theoretical part, author describes a notion of this concept, refers to known methods and describes the role of behavioral economics in treatment of this concept. In practical part, models are constructed to explain influence of selected indices on CDS which proxy for sovereign risk of individual developed and emerging markets. Across the globe, there is found strong common component which can be explained by selected indices. It is also observed that GRAI indicator can play role in case of emerging markets. In case of developed markets, however, this property is missing. Granger causality does not prove relationship of GRAI explanation power in direction to sovereign risk.
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Sázení na loterie a sportovní události z pohledu behaviorální ekonomie
Mikulka, Jakub ; Koblovský, Petr (advisor) ; van Koten, Silvester (referee)
This thesis deals with the relationship between mood and behavior of bettors using a dataset provided by a betting company, Chance a.s., which operates in the Czech Republic. We consider three types of proxies for the mood: weather in regions, sport successes and the results of elections, and we build a fixed effect model to estimate the effect of mood on betting behavior. We provide strong evidence that the weather proxy has a significant effect on daily turnovers of the betting company and there also seems to be an effect of sport optimism. On the contrary, we failed to find any impact of elections. The results show that better mood tend to discourage clients from sports and lottery betting which is consistent with the increase in risk aversion or the depletion of a common self-control resource due to active mood regulation attempts. Additionally, we provide an evidence that the intra-month cycle in turnovers corresponds to liquidity constraint of bettors which disproves the permanent income hypothesis.
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How much are we afraid of losing? Analysis of risk aversion.
Vokounová, Tereza ; Dlouhá, Zuzana (advisor) ; Čermáková, Klára (referee)
The whole thesis is focused on exploring how individuals make decisions under conditions of risk and uncertainty. The first section describes several economic theories, regarding explanation of human actions. The study points to the fact that the method of maximization expected utility cannot explain some examples of human decisions (eg. Allais paradoxes or the four-fold pattern) and to explain these effects, it is preferable to use prospect theory or cumulative prospect theory. In the second section, also based on results from the survey, I investigate the actual risk aversion in different situations (willingness to take risk in general, car driving, financial matters, sport and leisure, career and health) based on various factors. Statistically significant factor in all situations is gender when women show greater risk aversion in comparison to men. Age is a significant factor only in the willingness to take risk in general and in car driving. While in the willingness to take risks in general is a positive relationship between age and risk aversion, in car driving the relation is exactly the opposite. Level of education influences risk aversion in three situations - at risk in general (risk aversion increases with higher education), sport (risk aversion increases with higher education) and health issues (risk aversion decreases with higher education). In the health issues are people studying or working in the construction industry more risk-averse compared to people studying or working in the field of economics/finance. In car driving are individuals studying or working in the field of law more risk-averse than students or workers in the field of economics/finance. Another important factor is whether a person is working in public or private sector. In car driving, financial matters, career and health are people working in public sector more risk-averse compared to students and to people working in the private sector. Willingness to take risk in general is influenced by average monthly income - with a rising average monthly income is also growing willingness to take risks (decreasing risk aversion). Willingness to take risk in general, financial matters and career is higher for people who invest. Sportsmen/women are generally more willing to take risk in car driving, sport and career. Entrepreneurs are more willing to risk in career.
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Measurement of the aversion towards risk through the use of the game „Ber nebo neber“
Krkošková, Magdalena ; Potužák, Pavel (advisor) ; Janíčko, Martin (referee)
I explore the decision-making process of the contestats of the TV game show "Deal or no deal" in Czech version "Ber nebo neber". This decision-making process does not require any further skills or knowledge and it is based on the large stakes and deal or no deal decisions by accepting or rejecting possibility of continuing in the game. Based on the panel data set gathered from real played games, it is possible to determine the risk averse or risk seeking attitude of the contestants. The data set contains 28 episodes, 23 obtained directly from TV Prima and 5 of them from private sources, both between years 2007 and 2008. I assume the contestants under myopic and hyperopic framing and I find the average Arrow-Pratt coefficient of relative risk aversion (RRA). I consider different wealth levels and generally the RRA is lower for hyperopic framing. The differences in RRA may be most explained by the prior losses variable, which pictures the previous duration of the contestant's game.
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