Financial Planning and Financial Instruments: 2013 in Review, 2014 in Prospect

Financial Instruments in Recommendation Mechanisms

Capability-Based Financial Instruments

Every novel cooperative arrangement of mutually suspicious parties interacting electronically — every smart contract — effectively requires a new cryptographic protocol. However, if every new contract requires new cryptographic protocol design, our dreams of cryptographically enabled electronic commerce would be unreachable. Cryptographic protocol design is too hard and expensive, given our unl...

Prospect Theory for Online Financial Trading

Prospect theory is widely viewed as the best available descriptive model of how people evaluate risk in experimental settings. According to prospect theory, people are typically risk-averse with respect to gains and risk-seeking with respect to losses, known as the "reflection effect". People are much more sensitive to losses than to gains of the same magnitude, a phenomenon called "loss aversi...

ACCOUNTING FOR FINANCIAL INSTRUMENTS FOR BANKS Joint Working Group of Banking Associations on Financial Instruments

Financial Prospect Relativity: Context Effects in Financial Decision-Making Under Risky

We report three studies in which methodologies from psychophysics are adapted to investigate context effects on individual financial decision-making under risk. The aim was to determine how the range and the rank of the options offered as saving amounts and levels of investment risk influence people’s decisions about these variables. In the range manipulation, participants were presented with e...