Risk Preferences at the Time of COVID-19: An Experiment with Professional Traders and Students

Angrisani, Marco; Cipriani, Marco; Guarino, Antonio; Kendall, Ryan; Zarate, Julen Ortiz de

doi:10.2139/ssrn.3609586

Cited by 47 publications

(47 citation statements)

References 27 publications

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“…Consistently, the same panel data, which also included the SOEP general question for risk-taking, showed that women self-reported lower levels of risk-tolerance than men (Fan et al, 2020 ). While Drichoutis and Nayga ( 2020 ) and Chuang and Liu ( 2020 ) also found male participants to exhibit higher risk tolerance than their female participants, Angrisani et al ( 2020 ), on the other hand, did not find any effects associated with either gender or age.…”

Section: Background and Related Literaturementioning

confidence: 96%

“…Similarly, Angrisani et al ( 2020 ) measure risk taking in a sample of 60 undergraduate students and 48 professional traders in London before and after the first wave of the pandemic in the UK using the Bomb Risk Elicitation Task (BRET) measure (Crosetto and Filippin, 2013 ), and find no statistically significant changes in the risk preferences in their samples. In seeming contrast, Ikeda et al ( 2020 ) measured risk tolerance in an online survey of 19,737 respondents in Japan between March and June 2020 using hypothetical questions, and found an increase in risk tolerance over time.…”

Section: Background and Related Literaturementioning

confidence: 99%

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Heterogeneity in Risk-Taking During the COVID-19 Pandemic: Evidence From the UK Lockdown

2021

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In two pre-registered online studies during the COVID-19 pandemic and the early 2020 lockdown (one of which with a UK representative sample) we elicit risk-tolerance for 1,254 UK residents using four of the most widely applied risk-taking tasks in behavioral economics and psychology. Specifically, participants completed the incentive-compatible Balloon Analog Risk Task (BART) and the Binswanger-Eckel-Grossman (BEG) multiple lotteries task, as well as the Domain-Specific Risk-Taking Task (DOSPERT) and the self-reported questions for risk-taking used in the German Socio-economic Panel (SOEP) study. In addition, participants in the UK representative sample answered a range of questions about COVID-19-related risky behaviors selected from the UCL COVID-19 Social Survey and the ICL-YouGov survey on COVID-19 behaviors. Consistently with pre-COVID-19 times, we find that risk tolerance during the UK lockdown (i) was higher in men than in women and (ii) decreased with age. Undocumented in pre-COVID-19 times, we find some evidence for healthier participants displaying significantly higher risk-tolerance for self-reported risk measures. We find no systematic nor robust patterns of association between the COVID-19 risky behaviors and the four risk-taking tasks in our study. Moreover, we find no evidence in support of the so-called “risk compensation” hypothesis. If anything, it appears that participants who took greater risk in real-life COVID-19-relevant risky behaviors (e.g., isolating or taking precautions) also exhibited higher risk-tolerance in our experimental and self-reported risk-taking measures.

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Section: Background and Related Literaturementioning

confidence: 96%

Section: Background and Related Literaturementioning

confidence: 99%

Heterogeneity in Risk-Taking During the COVID-19 Pandemic: Evidence From the UK Lockdown

2021

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“…Risk preference and time preference choices play an important role in every person's life. These preferences influence economic agents' various activities such as saving, consumption and investment decisions (Angrisani et al 2020). Association of these preferences with situations that economic agents find themselves in, is equally crucial.…”

Section: Resultsmentioning

confidence: 99%

“…Association of these preferences with situations that economic agents find themselves in, is equally crucial. Angrisani et al (2020) emphasised the importance of assessing whether risk preferences are stable individual characteristics that are not affected by economic and social conditions among other factors. The notion that individuals are always rational when they make decisions has gradually lost its truthfulness.…”

Section: Resultsmentioning

confidence: 99%

Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data

Mudzingiri

Guvuriro

Gomo

2021

JRFM

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Research on economic behaviour of individuals in different financial statuses such as being in a good financial standing or in a threatening financial situation are inconclusive. Some evidence suggest that the culture of poverty may shape and dominate the economic preferences of those who are poor and even make them being prone to trembling and making mistakes thereby making decisions that do not maximize their utility. Other evidence suggest that the poor exercise extra caution and fail to maximize utility. This study investigates the association between self-reported financial status and economic preferences in a developing country setting using data from an incentivized experiment and a survey. Extended random effects panel probit regression models are employed as an analytical strategy. The study established a positive association between being financially broke or very broke and being risk averse. In addition, a positive association is found between being financially ‘very broke’ and impatient. Such findings illustrate the importance of psychology of poverty in economic preferences and in decision-making in general, even as poverty is temporary as represented by self-reported financial status.

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“…These 3 outliers are against this result; removing them only strengthens it: the average number of boxes collected is 50 for traders and 40 for students 26. In a recent paper,Angrisani et al (2020) show that risk preferences using BRET are stable over time and in spite of a negative shock represented by the COVID-19 pandemic.…”

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confidence: 96%

Trading by Professional Traders: An Experiment

et al. 2020

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We examine how professional traders behave in two financial market experiments; we contrast professional traders' behavior to that of undergraduate students, the typical experimental subject pool. In our first experiment, both sets of participants trade an asset over multiple periods after receiving private information about its value. Second, participants play the Guessing Game. Finally, they play a novel, individual-level version of the Guessing Game and we collect data on their cognitive abilities, risk preferences, and confidence levels. We find three differences between traders and students: Traders do not generate the price bubbles observed in previous studies with student subjects; traders aggregate private information better; and traders show higher levels of strategic sophistication in the Guessing Game. Rather than reflecting differences in cognitive abilities or other individual characteristics, these results point to the impact of traders' on-the-job learning and traders' beliefs about their peers' strategic sophistication.

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Risk Preferences at the Time of COVID-19: An Experiment with Professional Traders and Students

Cited by 47 publications

References 27 publications

Heterogeneity in Risk-Taking During the COVID-19 Pandemic: Evidence From the UK Lockdown

Heterogeneity in Risk-Taking During the COVID-19 Pandemic: Evidence From the UK Lockdown

Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data

Trading by Professional Traders: An Experiment

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