Association of Economic Internality With Saving Behavior and Motives, Financial Confidence, and Attitudes Toward State Intervention1

CEO Overconfidence and Corporate Governance in Affecting Australian Listed Construction and Property Firms’ Trading Activity

This paper aims to examine whether and to what extent overconfident CEOs affect Australian real estate investment trusts’ (A-REITs) property investment activities during their tenure as the CEO of A-REITs, covering the period 2000–2019. A-REITs’ property investment and disposal activities are separately modelled against CEOs shares in their companies (an indicator of CEO overconfidence), as well as other controlled variables. We found that around 68% of A-REIT CEOs are overconfident over the study period. However, our empirical results also indicated that CEO overconfidence did not have a profound impact on A-REITs’ investment activities, either property acquisitions or disposals. This could be explained by high corporate governance of A-REITs. Specifically, Australian construction and property companies are the leading market players in sustainability. As publicly quoted companies, listed property and construction companies, particularly A-REITs could be exposed to various managerial issues, including corporate CEO overconfidence and its influence on the investment decision-making process. However, this managerial issue could be minimized via an enhancement of corporate governance that is a key pillar of sustainability. The mitigation of corporate overconfidence and implementation of corporate governance mechanisms makes REITs more accountable to their investors. The implications of the findings have also been discussed.

Investor Overconfidence and Trading Activity in the Asia Pacific REIT Markets

Overconfidence is one of the most robust behavioral anomalies in financial markets. By attributing investment gains to their ability, investors become overconfident and trade aggressively in subsequent periods. Evidence from stock markets shows that overconfidence leads to excessive trading and, subsequently, inferior investment performance. However, studies on overconfidence effect are lacking in the real estate sector, which is particularly true for Asia Pacific real estate investment trust (REIT) markets. Thus, this study examines the overconfidence effect in six Asia Pacific REIT markets, namely, Australia, Hong Kong, Japan, Singapore, South Korea, and Taiwan. The study finds that the overconfidence effect is more conspicuous during market boom periods or in inefficient market conditions. In addition, simulation analysis demonstrates that overconfidence could lead to rather large volumes of excessive trading activities in certain markets. Findings are robust across the alternative measures of control variables. Moreover, the policy implications of the research are also discussed.

Valuing and representing information: the paradox of undervaluing information and overvaluing information producers

Information's increasing importance in contemporary societies raises questions concerning laymen's valuation of information and of professionals producing information. The main hypotheses were: (a) potential sellers will underestimate information's value compared to that of material goods; (b) when potential buyers' involvement is high (that is high investment and high risk), sellers will demand even lower prices for information; (c) some important current functions and meanings of information are not assimilated in social representations of information; (d) by contrast, participants must overvalue the remuneration of professionals producing pure information (invention) compared to those who apply this information to produce material goods. An experimental study confirmed hypotheses (a) and (b). A second study to investigate the structure of information's social representations showed that the representation's central core is mainly composed of categories referring to traditional media, functions and technologies; contemporary functions and technologies are less frequent or absent. A third experimental study confirmed hypothesis (d).

How much is information worth? Willingness to pay for expert and non-expert informational goods compared to material goods in lay economic thinking

Economists consider information a paradoxical good of uncertain value. This experimental study compares the valuation of economic information to the valuation of material goods when subjects possess perfect information so that uncertainty about the outcome of the transaction is eliminated. It also aims to study the participants' justifications of their valuations, in order to examine the underlying cognitive processes. The main hypotheses were that: (a) even if subjects deal with perfect information they will underestimate its value compared to the value of material goods; (b) underestimation of the value of information will be greater in conditions of high involvement, that is when expected payoff and therefore investment and risk are high; and (c) expert information will be valued more highly than non-expert information, since it should be regarded as more reliable. In the main study, two groups of students in the same university were asked to value and justify their valuation of material goods, under conditions of certain low (1000) and high (100,000) payoffs, respectively. Two other groups were asked to value and to justify their valuation of non-expert information under the same conditions of profit. Finally, two more groups of students were asked to value and justify their valuation of expert information, again under conditions of low or high expected profit. The findings of the study show that under all conditions subjects underestimate the value of information both absolutely and relatively in comparison to material goods, especially under conditions of high involvement. The participants' justifications of their own valuations are heuristics which seem to take into account the uncertain character of informational goods.