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The contribution of Daniel Kahneman to the psychology of thinking
Zelinová, Alena ; Heller, Daniel (advisor) ; Uhlář, Pavel (referee)
Bachelor thesis in the form of scoping study summarizes Daniel Kahneman contribution to the psychology of thinking. It surveys his work from the 70s of the 20th century the subjective probability, which deals with the application of heuristics and biases in the judgement of uncertain events. It continues with prospect theory which is a descriptive model of human decision making under risk, and which reveals the automatic and systematic violations of principles of rationality in decision making. After that it focuses on Kahneman's research from the 90s in the field of hedonic psychology from the perspective of a cognitive psychologist. The thesis completes with his current work popularizing the fast and slow thinking. Part of this work is a research proposal of the price of memories from holidays, aiming to verify Kahneman's concept of the difference between the experienced utility and decision utility.
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Prospect Theory in the Cryptocurrency Market
Coufalová, Kristýna ; Kukačka, Jiří (advisor) ; Kučera, Tomáš (referee)
This thesis investigates the potential of cumulative prospect theory to ex- plain future cryptocurrencies' returns. Moreover, the study aims to determine whether the predictive power of cumulative prospect theory value persists when cumulative prospect theory value is computed by plugging the percentage form of return (for instance, 5%) instead of the decimal form (for instance, 0.05). Using a rolling sample of 200 cryptocurrencies with the highest market capitali- sation for each month from March 2017 to March 2023, we found that regardless of using returns in percentage or decimal form, the cumulative prospect theory value function produces comparative abnormal portfolio returns and confirms the hypothesis that cryptocurrencies with high (low) cumulative prospect the- ory value earn low (high) subsequent returns. JEL Classification G11, G12, G41 Keywords Prospect theory, Cumulative Prospect Theory, Cryptocurrency, Behavioural Economics Title Prospect Theory in the Cryptocurrency Market Author's e-mail 31078966@fsv.cuni.cz Supervisor's e-mail jiri.kukacka@fsv.cuni.cz
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A behavioral analysis of market failures
Urbanová, Aneta ; Sieber, Martina (advisor) ; Vlček, Josef (referee)
The thesis deals with a contemporary stream of the behavioral economics at the labour market in connection with a divergence to the neoclassical theory based on explicit assumption of rationality. The existing theoretical approaches and the examples of experiments are introduced in the theoretical part. The irrational impacts on labour market is defined by the amount of wage, unemployment, education, but on the other hand also by motivation, loss aversion, prejudices and other cognitive biases in human decision making process. The practical part is based on the standardized questionnaire survey in which the respondents were given some simplified decision making dilemmas in context of the labour market. The aim of the thesis is to observe their tendency to choose not always the most effective option and to validate the impact of irrational factors on decision making according to the theoretical approaches. Key words: Behavioral economics, limited rationality, market failures, labour market, prospect theory, heuristics, biases
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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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The contribution of Daniel Kahneman to the psychology of thinking
Zelinová, Alena ; Heller, Daniel (advisor) ; Uhlář, Pavel (referee)
Bachelor thesis in the form of scoping study summarizes Daniel Kahneman contribution to the psychology of thinking. It surveys his work from the 70s of the 20th century the subjective probability, which deals with the application of heuristics and biases in the judgement of uncertain events. It continues with prospect theory which is a descriptive model of human decision making under risk, and which reveals the automatic and systematic violations of principles of rationality in decision making. After that it focuses on Kahneman's research from the 90s in the field of hedonic psychology from the perspective of a cognitive psychologist. The thesis completes with his current work popularizing the fast and slow thinking. Part of this work is a research proposal of the price of memories from holidays, aiming to verify Kahneman's concept of the difference between the experienced utility and decision utility.
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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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application of prospect theory on poker players
Ludvík, Tomáš ; Šťastný, Daniel (advisor) ; Chytilová, Helena (referee)
Based on previous works on application of prospect theory this paper try a similar procedure to prove the truth of prospect theory for poker players. Data are collected from online poker casino Pokerstars within a few days. These data, however, are not entirely opportune to test prospect theory, since it can not accurately determine the reference point for prospect theory. Looseness measurements confirmed findings of prospect theory. Players are risk seeking for loss and risk aversion for profit. This effect is more noticeable in losses than in equally high profits. And also players are feeling more actual losses and gains than earlier losses and gains. Measurement of aggression also confirmed prospect theory but are not significant. This may be due to the way aggression is measured, because players can simply substitute the aggressive actions by calling, which can also increase the risk. Also this paper fail to demonstrate that the most risk averse players can turn pritable after loss, which results in increased risk.
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Theory of behavioral finance
Šulc, Miroslav ; Kuncl, Martin (advisor)
The bachelor thesis is dedicated to behavioral finance and it's application. The thesis describes evolution of the theory till present. Theories are introduced, which forego behavioral finance, for example Expected utility theory. Just as well the newest discipline, neuroeconomics, is outlined. The application part of the thesis analyse bubble on technological market in USA 1995-2000.
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Behavioral finance
Lisko, Adrian ; Kuncl, Martin (advisor)
This paper concerns in general with the theory of behavioral finance and has a deep interest in the prospect theory. It is conerned with causes of uprise and development of the prospect theory. The paper shows her limits and advantages against the expected utility theory. Simultaneously the paper includes some empirical observations confirming validity of the theory and possibilities of her application.
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