Volatility Shocks and Investment Behavior

Christoph Huber, Jürgen Huber and Michael Kirchler

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: We investigate how volatility shocks affect investors' risk-taking, risk perception and forecasts. We run artefactual field experiments with two participant pools (finance professionals and students), differing in (i) the direction of the shock (down, up, or a neutral case) and (ii) the presentation format of the time series (prices or returns). ProfessionalsÕ investments are negatively associated with the price change and performance of the stock and their perceived risk increases to a similar extent following shocks of all directions. Students' risk perception, in contrast, is more closely related to the frequency of negative returns rather than an increase in volatility.

Keywords: Risk perception; experimental finance; finance professionals; volatility shocks (search for similar items in EconPapers)
JEL-codes: C91 G11 G41 (search for similar items in EconPapers)
Pages: 68
Date: 2021-06
New Economics Papers: this item is included in nep-cwa, nep-exp and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Volatility shocks and investment behavior (2022)
Working Paper: Volatility shocks and investment behavior (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2021-06

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