Cultural Finance: A World Map Of Risk, Time And Money

Contents
About the Authors
Acknowledgments
Chapter 1: Introduction — Experiences from a Global Survey
Part I: Time
	Chapter 2: How Time Preferences Differ: Evidence from 53 Countries
		Abstract
		1. Introduction
		2. Relationship between Culture and Time Preferences
		3. Methodology
			3.1. Measuring time preference
			3.2. Measuring cultural dimensions
			3.3. The survey instrument
			3.4. Control variables
				3.4.1. Wealth
				3.4.2. Age and gender
				3.4.3. Economic growth and inflation
		4. Results
			4.1. Waiting tendency
				4.1.1. Descriptive results on waiting tendency
				4.1.2. Regression results on waiting tendency
			4.2. Inferred discount rate: The classical approach
			4.3. Quasi-hyperbolic and subadditive discounting model
				4.3.1. Quasi-hyperbolic discounting model
				4.3.2. Subadditive discounting model
			4.4. Regression results on quasi-hyperbolic and subadditive discounting factors
				4.4.1. Quasi-hyperbolic discounting model
				4.4.2. Subadditive time discounting model
			4.5. Partial correlations between different measurement of time preference
			4.6. Potential applications
				4.6.1. Innovation
				4.6.2. Environmental protection
				4.6.3. Credit rating
				4.6.4. Body Mass Index (BMI)
			4.7. Further applications
		5. Discussion
			5.1. Interpretation of main results
			5.2. Methodological concerns
		6. Conclusion
		Acknowledgements
		References
	Chapter 3: What Do We Measure When We Measure Time Discounting? The Impact of Wealth, Growth Rate and Financial Market Accessibility
		Abstract
		1. Introduction
		2. Inter-temporal Decisions Under Constraints
		3. An International Survey on Time Preferences
			3.1. Measuring time preference
			3.2. Measuring risk preferences
			3.3. Participants and instruments
		4. Results
			4.1. Independent variables
				4.1.1. Wealth
				4.1.2. Economic growth and inflation rate
				4.1.3. Financial market accessibility
				4.1.4. Risk preference
			4.2. Regression results
		5. Discussion and Conclusion
		References
		Appendix A: Proofs of Mathematical Results
	Chapter 4: How Politics Affects Time Preferences: The Case of Eastern Europe
		Reference
	Chapter 5: Time Preferences and Migration
		References
Part II: Risk
	Chapter 6: Risk Preferences Around the World
		Abstract
		1. Introduction
		2. Literature Review
		3. Methodology
			3.1. Participants
			3.2. Questionnaire and survey procedure
			3.3. Data quality and selection
			3.4. Relative risk premium
		4. Results
			4.1. Descriptive results on relative risk premium
			4.2. Regression analysis
				4.2.1. Gender and age
				4.2.2. Wealth
				4.2.3. Individualism
				4.2.4. Uncertainty Avoidance Index
				4.2.5. Ambiguity aversion
				4.2.6. Cultural clusters
		5. Discussion
		6. Conclusion
		7. Supplemental Material
		Acknowledgments
		Appendix A. Pilot Study on Effects of Monetary
Incentives
		Appendix B. Reliability Check of Relative Risk
Premium Measures
		Appendix C. Universities Participating in INTRA
		References
	Chapter 7: The Impact of Culture on Loss Aversion
		Abstract
		1. Introduction
			1.1. Risk aversion versus loss aversion
			1.2. Emotion and loss aversion
			1.3. Culture, emotion, and loss aversion
			1.4. Individualism
			1.5. Power distance index
			1.6. Masculinity
			1.7. Uncertainty avoidance index
		2. Data and Methodology
			2.1. Questionnaire
			2.2. Survey procedure and participants
			2.3. Secondary data
		3. Empirical Analysis
			3.1. Data preparation
			3.2. Descriptive results and between-country variation
			3.3. Distinguishing loss aversion and risk aversion
			3.4. Difference between cultural clusters
			3.5. Impacts of cultural dimensions and religions on loss aversion
			3.6. Robustness checks
		4. Conclusions
			4.1. Universities participating in INTRA
		Acknowledgements
		References
	Chapter 8: Estimating Cumulative Prospect Theory Parameters from an International Survey
		Abstract
		1. Introduction
		2. Methodology
			2.1. Subjects
			2.2. Questionnaire
		3. Estimation of CPT Parameters
			3.1. Model choice
			3.2. Estimation procedure
			3.3. Robustness of estimates
			3.4. Interpretation of parameter estimates
			3.5. Within-country vs. Between-country differences
		4. A Closer Look at Probability Weighting
		5. Discussion
		6. Conclusions
		Acknowledgements
		Universities participating in INTRA
		References
	Chapter 9: Too Risk-Averse for Prospect Theory?
		Abstract
		1. Introduction
		2. Prospect Theory
		3. Limits to Risk-Aversion in Prospect Theory
			3.1. Standard value function
			3.2. Exponential value functions
			3.3. Quadratic value functions
		4. Empirical Evidence
		5. Conclusions
		Acknowledgments
		References
		Appendix
	Chapter 10: Risk Preferences in Eastern and Western Europe
		Reference
	Chapter 11: How Gender Effects Differ Between Countries
		References
Part III: Financial Markets
	Chapter 12: International Evidence on the Equity Premium Puzzle and Time Discounting
		Abstract
		1. The Equity Premium Puzzle — An Overview
		2. Myopia and the Equity Premium
		3. Empirical Results On Time Discounting and the Equity Premium
			3.1. Methodology
			3.2. Results
		4. Conclusions
		Acknowledgements
		References
	Chapter 13: Can Ambiguity Aversion Solve the Equity Premium Puzzle? Survey Evidence from International Data
		Abstract
		1. Introduction
			1.1. What is the equity premium puzzle?
			1.2. What is ambiguity aversion?
			1.3. Theoretical models for ambiguity aversion and equity risk premium
		2. Measuring Ambiguity Aversion and Equity
Premium
			2.1. Why a survey?
			2.2. Methodology
			2.3. Empirical results
			2.4. Cultural dimension: uncertainty avoidance
		3. Summary and Conclusions
		Acknowledgments
		References
	Chapter 14: The Fundamental Equity Premium and Ambiguity Aversion in an International Context
		Abstract
		1. Introduction
		2. Related Literature
			2.1. Measurements of equity premia
			2.2. Ambiguity aversion to explain the equity premium
		3. The “Fundamental” Equity Premium
		4. Data on Ambiguity Aversion and the Empirical Approach
			4.1. Data on ambiguity aversion and risk preferences
			4.2. Regression models and controls
		5. Empirical Tests on Ambiguity Aversion and the Equity Premium
			5.1. Key results
			5.2. Robustness checks
		6. Conclusions
		References
	Chapter 15: Time Discounting and the Value Premium
		Abstract
		1. Introduction
		2. Model
			2.1. Setup of the model
			2.2. Solution of the model and formulation of testable hypotheses
		3. Empirical Results
			3.1. Data description and summary statistics
			3.2. Result on the two hypotheses
		4. Conclusion
		References
		Appendix A. Proofs
	Chapter 16: Impacts of Ambiguity Aversion and Information Uncertainty on Momentum: An International Study
		Abstract
		1. Introduction
		2. Literature Review and Hypotheses
			2.1. Information uncertainty and momentum effect
			2.2. Ambiguity aversion and information avoidance
		3. Data Description
			3.1. Stock data
			3.2. The measurement of ambiguity aversion
		4. Cross-country Analysis
			4.1. The mean effect of information uncertainty at the country level
			4.2. Interaction with momentum at the country level
		5. The Interaction Effect of Ambiguity Aversion and Information Uncertainty on Momentum
			5.1. Portfolio analysis
			5.2. Fama-MacBeth (1973) regression analysis
		6. Robustness Checks
			6.1. Three-factor model results
			6.2. Alternative proxy for ambiguity aversion:
Uncertainty avoidance index
			6.3. Individualism and informationun certainty effect
			6.4. Sub-sample analysis
			6.5. Lag in information uncertainty effect
		7. Post-holding Period Returns of Momentum Portfolio
		8. Conclusion
		References
	Chapter 17: The Behavioral Foundations of Corporate Dividend Policy a Cross-Country Analysis
		Abstract
		1. Introduction
		2. The Determinants of Corporate Dividend Policy: Literature Overview
		3. Behavioral Patterns of Corporate Dividend Policy: A Simple Model
		4. Empirical Analysis of Cross-Country Behavioral
Patterns of Corporate Dividend Policy
			4.1. Data on behavioral dimensions
			4.2. Data on dividend ratios
			4.3. Data on control variables
		5. Results
		6. Discussion
			6.1. Empirical methodology
			6.2. Alternative measures for country-specific control variables
			6.3. Alternative measures of preference parameters
			6.4. Cultural explanation of dividend payments
			6.5. Additional control variables
			6.6. Market cycles and dividend policy
			6.7. Foreign ownership and the impact of preference parameters
			6.8. Market valuation and preference parameters
		7. Conclusion
		Acknowledgment
		References
	Chapter 18: Corporate Cash Holdings and Ambiguity Aversion
		Abstract
		1. Introduction
		2. Ambiguity and Ambiguity Aversion
		3. The Behavioral Explanation for Cash Holdings: A Simple Model
			3.1. Assumptions
			3.2. Consequences
		4. Empirical Analysis
			4.1. Data
				4.1.1. Ambiguity aversion
				4.1.2. Data on other dependent and independent variables
			4.2. Regression models
				4.2.1. First hypothesis: Valuation effects of cash holdings
				4.2.2. Second hypothesis: The amount of optimal cash holding
			4.3. Results
		5. Discussion
			5.1. Uncertainty regarding future earnings and ambiguity aversion
			5.2. Ambiguity aversion and R&D investments
			5.3. Cash and short-term financial distress
			5.4. Foreign ownership and the relationship between cash and ambiguity aversion
			5.5. Risk aversion or ambiguity aversion
			5.6. Empirical methodology
			5.7. Ambiguity aversion or uncertainty avoidance
		6. Conclusion
		Appendix
		Acknowledgments
		References
	Chapter 19: Home Bias and Ambiguity Aversion
		References
	Chapter 20: On the Determinants of Household Debt Maturity Choice
		Abstract
		1. Introduction
		2. Data Description
		3. A Behavioural Approach
		4. A Cultural Approach
		5. Empirical Analysis
		6. Conclusion
		References
Epilogue: Applications and Alternative Measures
	1. Time Preferences
	2. Risk Preferences
	3. Alternative Measurements
	4. UP TIME: Combining All Data on Time Preferences
	References