The Risk Perceptions of Individual Investors
By C. Veld, Y. Veld-Merkoulova. 2008
136 citations recorded by the source corpus.
Risk perceptions of individual investors are studied by asking experimental questions to 2226 members of a consumer panel. Their responses are analyzed in order to find which risk measures they implicitly use. We find that most investors implicitly use more than one risk measure. For those investors who systematically perceive risk according to the same risk measure, semi-variance of returns is most popular. Semi-variance is similar to variance, but only negative deviations from the mean or another benchmark are taken into account. Stock investors implicitly choose for semi-variance as a risk measure, while bond investors favor probability of loss. Investors state that they consider the original investment to be the most important benchmark, followed by the risk-free rate of return, and the market return. However, their choices in the experimental questionnaire study reveal that the market return is the most important benchmark.
Subfields: Economics and Econometrics, Finance, General Decision Sciences
View Paper: https://www.semanticscholar.org/paper/0dbbc0527870a1d02d7972e9e24f2c4af20c888c
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Citations in the corpus
- The Less You Know, the More You Are Afraid of—A Survey on Risk Perceptions of Investment Products (2011, background): “Diacon & Ennew (2001) reported that the perception on risk of personal financial service can be characterized by five dimensions, namely, distrust, the seriousness of averse consequence, volatility, knowledge/observability, and failure of regulation.”
- Do Happy People Make Optimistic Investors (2015, unknown): “1 For studies that rely on similar internet panel data that are representative of the population of The Netherlands see, for example, Veld and Veld-Merkoulova (2008), Guiso, Sapienza, and Zingales (2008), Bellemaere, Kröger, and Van Soest (2008), Von Gaudecker, Van Soest, and Wengström (2011), and…”