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Risk taking, preferences, and beliefs: Evidence from Wuhan

Di Bu, Tobin Hanspal, Yin Liao and Yong Liu

No 301, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: We study risk taking in a panel of subjects in Wuhan, China - before, during the COVID-19 crisis, and after the country reopened. Subjects in our sample traveled for semester break in January, generating variation in exposure to the virus and quarantine in Wuhan. Higher exposure leads subjects to reduce planned risk taking, risky investments, and optimism. Our findings help unify existing studies by showing that aggregate shocks affect general preferences for risk and economic expectations, while heterogeneity in experience further affect risk taking through beliefs about individuals' own outcomes such as luck and sense of control.

Keywords: COVID-19; Risk taking; Beliefs; Formative experiences; Expectations; China (search for similar items in EconPapers)
JEL-codes: G50 G51 G11 D14 G41 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cbe and nep-cna
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:301

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