Title: Which measures predict risk taking in a multi-stage controlled investment decision process?
Authors : Bachmann, Kremena
Hens, Thorsten
Stössel, Remo
Published in : Financial Services Review
Volume(Issue) : 2018
Pages : 339
Pages to: 365
Publisher / Ed. Institution : Academy of Financial Services
Issue Date: Apr-2018
License (according to publishing contract) : Licence according to publishing contract
Type of review: Peer review (Publication)
Language : English
Subject (DDC) : 332.6: Investment
Abstract: We assess the ability of different risk profiling measures to predict risk taking along a multistage process that reflects individuals’ discovery of their willingness to take risks. We find that the individual willingness to take risks varies along the process, but its level is always related to a composite measure of the individual risk tolerance. Assessment of the risk tolerance cannot be substituted by a simulated experience, although the latter can improve the perception of the risk and reward potential of the investment and motivate higher risk taking. The risk tolerance measure addresses different notions of risk, but we found that the individual loss aversion is the most powerful predictor of risk taking at all stages of the discovery process. By contrast, we found that neither the self-assessed risk tolerance measures nor the investment experience are suitable for consistently predicting risk taking at different stages of the process. © 2018 Academy of Financial Services. All rights reserved.
Departement: School of Management and Law
Organisational Unit: Institute of Wealth and Asset Management (IWA)
Publication type: Article in scientific Journal
ISSN: 1873-5673
URI: https://digitalcollection.zhaw.ch/handle/11475/7502
Appears in Collections:Publikationen School of Management and Law

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