Risk Tolerance, Projection Bias, Vividness, and Equity Prices

Grable, John E.; Lytton, Ruth H.; O’Neill, Barbara; Joo, So-Hyun; Klock, Derek

doi:10.3905/joi.2006.635632

Cited by 29 publications

(20 citation statements)

References 4 publications

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“…Results from nearly all previous studies indicate that males are more risk tolerant than females (e.g., Chaulk et al 2003;Grable et al 2006;Halek and Eisenhauer 2001;Hartog et al 2002;Jianakoplos and Bernasek 2008). As an exception, Schubert et al (1999) found that males and females did not differ in their risk propensities toward contextual decisions, but gender differences in risk propensity did exist in abstract gambling decisions.…”

Section: Predictors Of Risk Tolerancementioning

confidence: 91%

Do Market Returns Influence Risk Tolerance? Evidence from Panel Data

Yao

Curl

2010

J Fam Econ Iss

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Section: Predictors Of Risk Tolerancementioning

confidence: 91%

Do Market Returns Influence Risk Tolerance? Evidence from Panel Data

Yao

Curl

2010

J Fam Econ Iss

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“…It has been suggested in some studies that risk tolerance is time-varying, and declines following periods of economic turbulence or very poor investment returns (e.g., Grable et al, 2006;Tausch and Zumbuehl, 2016;Yao et al, 2004). Bateman et al (2011) observe a very modest moderation in risk tolerance immediately following the financial crisis period of 2008, although it did not affect the relative risk tolerance of young versus old or wealthy versus less affluent, a finding echoed in Gerrans et al (2015).…”

Section: Data Summarymentioning

confidence: 99%

Why are older investors less willing to take financial risks?

Brooks

Sangiorgi

Hillenbrand

et al. 2018

International Review of Financial Analysis

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We investigate the link between age and tolerance of financial risks in the context of attitude to risk questionnaires completed by clients when meeting their financial advisors. Using a unique database comprising the responses to over half a million such questionnaires, we show that risk tolerance declines at an increasing, albeit slow, rate with age. We investigate the explanatory power of the ability to bear losses, declining investment horizon and retirement effects, finding that these variables have considerably greater explanatory power for the cross-section of risk aversion than age, and that they are only able to partially mediate the link between age and risk tolerance. We are unable to uncover any evidence that declining cognitive abilities among older investors are able to explain their lower willingness to take financial risks. Overall, our results are indicative of a modest age effect in risk tolerance that cannot be attributed to changes in other observable characteristics that differ between younger and older investors.

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“…According to the law of effect (Thorn dike 1911), human beings are motivated to repeat past actions that lead to positive outcomes, and reduce past actions that produce negative outcomes. Due to the ubi quity of risk in financial decisions, many studies are focused on risk tolerance and find that risk tolerance is positively related to risky financial behaviors (Grable et al 2006;Halla r?an et al 2004;Yao et al 2004). The existing literature offers substantial evidence that people are likely to take action when they are motivated (Steers et al 2004 Risk tolerance mainly influences users ' threat perceptions.…”

Section: Copingmentioning

confidence: 99%

Avoidance of Information Technology Threats: A Theoretical Perspective

2009

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JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. This content downloaded from 144.82.Abstract This paper describes the development of the technology threat avoidance theory (TTAT), which explains individual IT users ' behavior of avoiding the threat of malicious information technologies. We articulate that avoidance and adoption are two qualitatively different phenomena and contend that tech nology acceptance theories provide a valuable, but incom plete, understanding of users ' IT threat avoidance behavior. Drawing from cybernetic theory and coping theory, TT AT delineates the avoidance behavior as a dynamic positive feedback loop in which users go through two cognitive pro cesses, threat appraisal and coping appraisal, to decide how to cope with IT threats. In the threat appraisal, users will perceive an IT threat if they believe that they are susceptible to malicious IT and that the negative consequences are severe. The threat perception leads to coping appraisal, in which users assess the degree to which the IT threat can be avoided by taking safeguarding measures based on perceived effectiveness and costs of the safeguarding measure and self efficacy of taking the safeguarding measure. TT A posits that users are motivated to avoid malicious IT when they perceive a threat and believe that the threat is avoidable by taking safeguarding measures; if users believe that the threat cannot be fully avoided by taking safeguarding measures, they would engage in emotion-focused coping. Integrating process theory and variance theory, TT AT enhances our under standing of human behavior under IT threats and makes an important contribution to IT security research and practice.

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Risk Tolerance, Projection Bias, Vividness, and Equity Prices

Cited by 29 publications

References 4 publications

Do Market Returns Influence Risk Tolerance? Evidence from Panel Data

Do Market Returns Influence Risk Tolerance? Evidence from Panel Data

Why are older investors less willing to take financial risks?

Avoidance of Information Technology Threats: A Theoretical Perspective

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