Identifying shipowners’ risk attitudes over gains and losses: Evidence from the dry bulk freight market

Maria Giamouzi and Nikos K Nomikos

Transportation Research Part E: Logistics and Transportation Review, 2021, vol. 145, issue C

Abstract: This study examines the risk-return trade-off in the dry bulk freight market under different scenarios such as risk measures, risk attitudes and controlling for variables associated with the freight rate cycle. For long-term contracts, there exists a negative association between risk and return, suggesting that shipowners are willing to offer a discount on time-charter rates over spot rates to compensate for the loss of flexibility. Additionally, shipowners are not uniformly risk averse, as finance theory suggests, since their utility functions are concave (risk-averse) for losses and convex (risk-seeking) for gains.

Keywords: Risk preferences; Prospect Theory; Risk-Return relationship; Dry Bulk freight market; Utility functions (search for similar items in EconPapers)
JEL-codes: D81 L91 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1016/j.tre.2020.102129

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