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Open AccessArticle

What Are Investors Afraid of? Finding the Big Bad Wolf

1
Department of Economics (DIEC), University of Genoa, 16126 Genoa, Italy
2
SDABocconi School of Management, Banking and Insurance Department, 20136 Milan, Italy
*
Author to whom correspondence should be addressed.
Int. J. Financial Stud. 2019, 7(3), 42; https://doi.org/10.3390/ijfs7030042
Received: 30 May 2019 / Revised: 22 July 2019 / Accepted: 24 July 2019 / Published: 29 July 2019
(This article belongs to the Special Issue Personal Finance)
The aim of financial institutions and regulators is to find an effective way to measure the risk profile of different segments of investors. Both economists and psychologists developed several methodologies to elicit and assess individual risk attitude, but these are not perfect and show several drawbacks when used in practice. Thanks to a unique database of around 15,000 investors, this paper combines survey-based evidence with revealed preferences based upon observed asset allocation. This paper confirms some results known in the literature like the gender and age differences in risk-taking. Moreover, the behavioral clustering approach used for the analysis is useful in an inferential framework. The segments built starting from the questionnaire permit to “forecast” the individual risk attitude that is described by the individual choices in terms of asset allocation. Loss aversion per se is a relevant variable in explaining financial risk-taking. View Full-Text
Keywords: risk profile; behavioral finance; loss aversion; investors’ clustering; investors’ protection risk profile; behavioral finance; loss aversion; investors’ clustering; investors’ protection
MDPI and ACS Style

Alemanni, B.; Uberti, P. What Are Investors Afraid of? Finding the Big Bad Wolf. Int. J. Financial Stud. 2019, 7, 42.

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