The current issue brings forth new concepts in banking terminologyrisk and return involved in Lottery-Linked Deposit Accounts (LLDAs) on one hand and human behavioral aspects and implications of cognitive psychology and anthropology in decision making on the other. This issue also focuses on investors' agreeableness with selected perceptions to trace out the gaps between their perceptions and the underlying realities.

The first paper, "Why Expected Utility Theory Cannot Explain the Popularity of Lottery-Linked Deposit Accounts?", by Marie Pfiffelmann, comes up with a new concept regarding Lottery-Linked Deposit Accounts (LLDAs), which are financial assets that provide an interest rate determined by a lottery. The paper focuses on behavioral finance studies in the light of Kahneman and Tversky's cumulative prospect theory, which provides a good description for the emergence of these deposit accounts by simultaneously integrating risk-averse and risk-seeking behaviors. The authors conclude that LLDAs are `riskless', i.e., the lottery does not affect the principal but only the interest rate provided by the issuer, and the possibility of winning a large jackpot is an added bonus to the investors.

In the emerging field of behavioral finance, human behavior aspects and implications of cognitive psychology and anthropology in decision making are to be considered. This concept is well explained in the paper, "Effects of Friendship in Transactions in an Emerging Market: Empirical Evidence from Brazil", by Wesley Mendes-Da-Silva, Thaís Fernanda Salves de Brito, Rubens Famá and Jonathan Liljegren. Apart from their study conducted through questionnaires, the authors also conducted experiments following the structure used by Halpern (1994). The paper concludes that individuals involved in dealings with friends or strangers assume different behaviors, friends agree about the price attributed to an asset, while strangers show the propensity to bargain.

The last paper, "Identifying Perceptions and Perceptual Gaps: A Study on Individual Investors in Selected Investment Avenues", by M R Shollapur and A B Kuchanur, explains investors' perceptions on liquidity, profitability, collateral quality, statutory protection, etc., for various investment avenues. The authors conducted a study based on a questionnaire to measure the degree of investors' agreeableness with the selected perceptions, so as to trace the gaps between their perceptions and the underlying realities. The paper concludes that perceptual gaps analysis presents certain revelations: corporate securities are less preferred; government securities do not provide regular and steady income; investment in insurance policies appreciate in values; bank deposits require more transaction costs, etc.

- C Vijaychandra Kumar
Consulting Editor