Which measures predict risk taking in a multi-stage controlled investment decision process?

Bachmann, Kremena; Hens, Thorsten; Stössel, Remo

Publication type:	Article in scientific journal
Type of review:	Peer review (publication)
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
Page(s):	339
Pages to:	365
Issue Date:	Apr-2018
Publisher / Ed. Institution:	Academy of Financial Services
ISSN:	1873-5673
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.
URI:	https://digitalcollection.zhaw.ch/handle/11475/7502
Fulltext version:	Published version
License (according to publishing contract):	Licence according to publishing contract
Departement:	School of Management and Law
Organisational Unit:	Institute of Wealth & Asset Management (IWA)
Appears in collections:	Publikationen School of Management and Law

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Bachmann, K., Hens, T., & Stössel, R. (2018). Which measures predict risk taking in a multi-stage controlled investment decision process? Financial Services Review, 339–365.

Bachmann, K., Hens, T. and Stössel, R. (2018) ‘Which measures predict risk taking in a multi-stage controlled investment decision process?’, Financial Services Review, pp. 339–365.

K. Bachmann, T. Hens, and R. Stössel, “Which measures predict risk taking in a multi-stage controlled investment decision process?,” Financial Services Review, pp. 339–365, Apr. 2018.

BACHMANN, Kremena, Thorsten HENS und Remo STÖSSEL, 2018. Which measures predict risk taking in a multi-stage controlled investment decision process? Financial Services Review. April 2018. S. 339–365

Bachmann, Kremena, Thorsten Hens, and Remo Stössel. 2018. “Which Measures Predict Risk Taking in a Multi-Stage Controlled Investment Decision Process?” Financial Services Review, April, 339–65.

Bachmann, Kremena, et al. “Which Measures Predict Risk Taking in a Multi-Stage Controlled Investment Decision Process?” Financial Services Review, Apr. 2018, pp. 339–65.