Salience, risky choices and gender

Booth, Alison L.; Nolen, Patrick J.

doi:10.1016/j.econlet.2012.06.046

Cited by 18 publications

(5 citation statements)

References 13 publications

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“…As compared to women, men changed their choices of investment to riskier avenues when the possibility of higher returns was made more apparent. Interestingly, it also concluded that part of the risk difference in gender could be manipulated by orchestrated information (Booth and Nolen, 2012). Survey data that gathered investment risk perceptions from both professional portfolio managers and their clients indicated that there was a high correlation between risk attributes and perceived risk.…”

Section: Literature Review 21 Theoretical Framework and Prominent Wor...mentioning

confidence: 99%

Influence of risk propensity, behavioural biases and demographic factors on equity investors' risk perception

Saivasan

Lokhande

2022

AJEB

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PurposeInvestor risk perception is a personalized judgement on the uncertainty of returns pertaining to a financial instrument. This study identifies key psychological and demographic factors that influence risk perception. It also unravels the complex relationship between demographic attributes and investor's risk attitude towards equity investment.Design/methodology/approachExploratory factor analysis is used to identify factors that define investor risk perception. Multiple regression is used to assess the relationship between demographic traits and factor groups. Kruskal–Wallis test is used to ascertain whether the factors extracted differ across demographic categories. A risk perception framework based on these findings is developed to provide deeper insight.FindingsThere is evidence of the relationship and influence of demographic factors on risk propensity and behavioural bias. From this study, it is apparent that return expectation, time horizon and loss aversion, which define the risk propensity construct, vary significantly based on demographic traits. Familiarity, overconfidence, anchoring and experiential biases which define the behavioural bias construct differ across demographic categories. These factors influence the risk perception of an individual with respect to equity investments.Research limitations/implicationsThe reference for the framework of this study is limited as there has been no precedence of similar work in academia.Practical implicationsThis paper establishes that information seekers make rational decisions. The paper iterates the need for portfolio managers to develop and align investment strategies after evaluation of investors' risk by including these behavioural factors, this can particularly be advantageous during extreme volatility in markets that concedes the possibility of irrational decision making.Social implicationsThis study highlights that regulators need to acknowledge the investor's affective, cognitive and demographic impact on equity markets and align risk control measures that are conducive to market evolution. It also creates awareness among market participants that psychological factors and behavioural biases can have an impact on investment decisions.Originality/valueThis is the only study that looks at a three-dimensional perspective of the investor risk perception framework. The study presents the relationship between risk propensity, behavioural bias and demographic factors in the backdrop of “information” being the mediating variable. This paper covers five characteristics of risk propensity and eight behavioural biases, such a vast coverage has not been attempted within the academic realm earlier with the aforesaid perspective.

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Section: Literature Review 21 Theoretical Framework and Prominent Wor...mentioning

confidence: 99%

Influence of risk propensity, behavioural biases and demographic factors on equity investors' risk perception

Saivasan

Lokhande

2022

AJEB

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“…In a different context using a different risk measure,Booth and Nolen (2012c) showed that salience affects young men and women differently. Though we did not report single-sex class effects in the published version of that paper, in preliminary estimates we found that they had no effect on switching behavior, nor did we expect them to.…”

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confidence: 99%

Gender differences in risk aversion : Do single-sex environments affect their development?

Booth¹,

Sosa²,

Nolen³

2013

Self Cite

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Single-sex classes within coeducational environments are likely to modify students' risktaking attitudes in economically important ways. To test this, we designed a controlled experiment using first year college students who made choices over real-stakes lotteries at two distinct dates. Students were randomly assigned to weekly classes of three types: all female, all male, and coeducational. They were not allowed to change group subsequently. We found that women are less likely to make risky choices than men at both dates. However, after eight weeks in a single-sex class environment, women were significantly more likely to choose the lottery than their counterparts in coeducational groups. These results are robust to the inclusion of controls for IQ and for personality type, as well as to a number of sensitivity tests. Our findings suggest that observed gender differences in behaviour under uncertainty found in previous studies might partly reflect social learning rather than inherent gender traits.JEL Classification: C9, C91, C92, J16, D01, D80, J16, J24

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“…The four single--sex schools in our experiment are part of the CSSE. Nolen (2012c). While this is an interesting finding that we hope will be further investigated in future work, this is not the focus of this paper.…”

Section: Resultsmentioning

confidence: 82%

“…Recent theories suggest that probability weights vary depending on which portion of a risky environment is made salient. Booth and Nolen (2012c) used experimental data to show that salience affects young men and women differently. We found that men are significantly more likely than women to switch from a certain to a risky choice once the upside of winning is made salient, even though the expected value of the choice remains the same.…”

Section: Resultsmentioning

confidence: 99%

Can Risk-taking Preferences be Modified? Some Experimental Evidence

Booth¹,

Nolen²

2014

CESifo Economic Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We summarise our two sets of controlled experiments designed to see if single-sex classes within coeducational environments modify students' risk-taking attitudes. In Booth and Nolen (2012b), subjects are in years 10 and 11, while in Booth, Cardona-Sosa and Nolen (2014), they are first-year university students randomly assigned to single-sex and coed classes. While on average females are significantly less likely than men to make risky choices, on exposure to single-sex environments they behave the same as the males. Thus part of the observed gender difference in behavior under uncertainty found in previous studies might reflect social learning rather than inherent gender traits. Terms of use: Documents in EconStor mayJEL-Code: C900, C910, C920, J160, D010, D800, J160, J240.

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Salience, risky choices and gender

Cited by 18 publications

References 13 publications

Influence of risk propensity, behavioural biases and demographic factors on equity investors' risk perception

Influence of risk propensity, behavioural biases and demographic factors on equity investors' risk perception

Gender differences in risk aversion : Do single-sex environments affect their development?

Can Risk-taking Preferences be Modified? Some Experimental Evidence

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