Determinants of Risk Taking Behavior: The role of Risk Attitudes, Risk Perceptions and Beliefs

Alen Nosic () and Martin Weber ()
Additional contact information
Alen Nosic: Sonderforschungsbereich 504, Postal: L 13, 15, D-68131 Mannheim
Martin Weber: Lehrstuhl für ABWL, Finanzwirtschaft, insb. Bankbetriebslehre, Postal: L 5, 2, D-68131 Mannheim

No 07-56, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim

Abstract: Our study analyzes determinants of investors' risk taking behavior. We find that investors' risk taking behavior, i.e. portfolio choices can be predicted using risk attitudes, risk perceptions and belief measures such as optimism and overconfidence. However, the predictive power of these determinants heavily depends on the domain in which it was elicited. More specifically, risk attitudes, risk perceptions and beliefs only allow us to predict investors' risk taking behavior if they are elicited in an investment related context. We think that our results could also benefit practitioners who could incorporate some of the determinants we have used in their investment advisory process.

New Economics Papers: this item is included in nep-cba, nep-cbe and nep-upt
Date: Written 2007-07-31
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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