Israel was the first nation to establish a vaccination program during the COVID-19 pandemic. Thus, its citizens could look to no other country to help them judge its influence. People's predictions ...of their safety should depend on whether they were vaccinated, whereas their predictions regarding the COVID-19 pandemic should be based on the degree of progress of the vaccination program. We expected people to understand that the program would improve their safety by reducing the number of infected people around them.
An original panel survey was conducted covering the pandemic's first year. Respondents reported their vaccination status, emotions, evaluations of their safety, and predictions about the spread of COVID-19 and the Israeli gross domestic product.
Estimates of fixed-effects models using the survey data suggest that being vaccinated affected people's cognitions about their own safety and their emotions but not their expectations regarding the situation in Israel as a whole. In contrast, the vaccination rate in Israel affected only the respondents' expectations about the spread of COVID-19, their own income, and Israel's gross domestic product.
Being vaccinated is important for people's personal emotional and cognitive relief during a pandemic. A high vaccination rate improves people's economic expectations, which is important to the recovery of economic activity.
•A zero risk-free rate has the strongest impact on individuals’ decisions.•The main explanation is the psychological effect of the number zero.•Individuals’ decisions are similar in positive and ...negative interest rate domains.•It is a supper relevant topic today.
The suggestion to implement a negative monetary policy has divided economists and politicians. The effects of this experiment on the willingness of individuals and financial intermediaries to borrow and spend money and increase their risk are controversial. To provide insight into the debate, we provide experimental evidence revealing two important results. First, zero interest rates are more efficient than negative interest rates in terms of the impact on the willingness of individuals to borrow money and take risks. We suggest two behavioral explanations for this result. Second, we find no statistical difference between the effect that positive and negative interest rates have on the change in the allocation of risky assets in investment portfolios.
•Study explains non-zero CCBS spreads after the global financial crisis due to corporate bond market friction causing premium in CCBS contracts.•Corporate funding needs linked to short- and long-term ...CCBS markets.•Exchange rates, interest rates, credit risk, and liquidity explain changes in CCBS spreads during economic stress.•Eurozone excess liquidity drives down spreads in short- and long-term EUR CCBS contracts.
This study examines the failure of covered interest parity (CIP) in long-term cross-currency basis swap (CCBS) markets. We conjecture that frictions in corporate bond markets urge firms to raise funds in one market and enter a CCBS contract to exchange the debt in a different currency. Therefore, frictions in the corporate bond market explain the failure of CIP in the long-term CCBS market. We illustrate this idea using a simple theoretical model and then explore the determinants of CCBS spreads, and demonstrate the links between corporate funding needs and the long-term CCBS market. Furthermore, we show that frictions (illiquidity in the banking sector) and credit risk are essential drivers of CCBS spreads during economic stress.
We explore the dynamics of the adjusted swap spread (calculated as the difference between the swap rate and sovereign yields over the credit default swap premium) in the Eurozone market by studying ...three markets simultaneously: 1) sovereign bonds, 2) credit default swaps (CDS), and 3) swap rates. We find a strong relationship between the markets. Specifically, based on the no-arbitrage argument, we show that the difference between the Euribor and Repo rates is a key driver of the adjusted swap spread. However, illiquidity premiums and systemic risk also play an essential role in times of economic stress and for less creditworthy countries. The findings also shed light on the recent negative swap spreads puzzle in the United States.
•We link the pricing of sovereign yields, CDS premiums, and swap rates for Eurozone countries using a no-arbitrage approach.•There is a structural break in the markets associated with significant events since the GFC of 2008.•The Euribor Repo spread is a driver of the spread between the swap rate and the yields of European sovereign bonds.•Illiquidity and systematic risk play important roles in times of economic stress and for less creditworthy countries.
Abstract
Consumers routinely make decisions about the timing of their consumption, making tradeoffs between consuming now or later. Most of the literature examining impatience considers monetary ...outcomes (i.e., delaying dollars), implicitly assuming that how the money is spent does not systematically alter impatience levels and patterns. The authors propose an impatience asymmetry for material and experiential purchases based on utility duration. Five studies provide evidence that consumers are more impatient toward experiential purchases compared to material purchases and that this increased impatience is driven by whether the value is extracted over a shorter utility duration (often associated with experiential purchases) or a longer utility duration (often associated with material purchases). Thus, when an experience is consumed over a longer period of time, the results show that impatience can be diminished. Additional results show that the effect holds in both delay and expedite frames and suggest that the results cannot be explained by differences in scheduling, time sensitivity, affect, ownership, future time perspective, or future connectedness.
The current study uses the unique setting created by the coronavirus crisis in China during the peak period of the pandemic to examine the behavioral factors affecting the decision of the Chinese ...people to adopt the precautionary actions recommended by the government.
Using the social app WeChat, we conducted a cross sectional study of the Chinese people in mid-February 2020.
Our results show that higher levels of dispositional optimism and support for the government's actions for managing the epidemic were positively correlated with the compliance level. In addition, women and married participants were more likely to comply with the recommendations.
Optimism and support for government actions should be considered when promoting policies related to health behavior such as social distancing.
Simulating a real world environment is of utmost importance for achieving accurate and meaningful results in experimental economics. Offering monetary incentives is a common method of creating this ...environment. In general, experimenters provide the rewards at the time of experiment. In this paper, we argue that receiving the reward at the time of the experiment may lead participants to make decisions as if the money they are using were not their own. To solve this problem, we devised a “prepaid mechanism” that encourages participants to use the money as if it were their own.
The current study tests experimentally whether decision makers' options pricing is biased by the magnitude of the option's underlying asset outcomes in what is called an anchor effect. We recruited ...1,023 participants through Amazon's Mechanical Turk platform (MTurk) and assigned them randomly to eight groups that differed by type of asset and pricing position (buy or sell). Participants were asked to price a lottery, meaning, the option, whose outcomes are derived from an underlying lottery with a high, low or non-numerical possible outcome. The results indicate that the underlying asset's magnitude (low or high) creates an anchor that affects the option's pricing. However, the option's pricing is not affected by framing it as a derivative lottery. To the best of our knowledge, this is the first study that examines whether the underlying asset creates an anchor that affects an option's pricing.
This study aims to improve our understanding of the effects of specific learning disabilities (SLD) in adulthood and improve work adjustment by comparing the time and risk preferences of 72 college ...students with SLD and 75 college students without SLD. Participants answered questionnaires about their time and risk preferences, made bids for two lottery tickets, and took the Cognitive Reflection Test (CRT). The results revealed that the subjective time discount rates of college students with SLD were significantly lower and more realistic, and their CRT scores were significantly higher. No significant difference in risk aversion was found between the two groups of participants. Finally, we discuss the effort exerted by students with SLD and their tendency to use System 2 processes as possible mechanisms for compensating for their cognitive deficits, and the implications of these results for work adjustment.
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