Can Risk‐Averse Households Make Risky Investments? The Role of Trust in Others

Alessandro Bucciol, Barbara Cavasso and Luca Zarri

Scandinavian Journal of Economics, 2019, vol. 121, issue 1, 326-352

Abstract: In this paper, using data from the Survey on Health, Ageing and Retirement in Europe (SHARE, 2006 and 2013 waves), we illustrate the link between individuals’ attitudes to financial risk combined with their willingness to trust others, and their investments in risky assets. Individuals who display either risk tolerance alone or – to a lesser extent – risk aversion and trust more frequently decide to buy risky assets. The comparison between Scandinavian and Mediterranean countries indicates that trust plays qualitatively different roles depending on the prevailing combination of risk attitude and trust in the area being studied.

Date: 2019
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https://doi.org/10.1111/sjoe.12278

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Working Paper: Can Risk Averse Households Make Risky Investments? The Role of Trust in Others (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:scandj:v:121:y:2019:i:1:p:326-352

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