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Title: Risk aversion in the years following the economic crisis
Authors: Darmanin, Matthew
Keywords: Risk-taking (Psychology)
Financial crises
Issue Date: 2012
Abstract: This research has tried to assess if risk aversion is still higher than normal now that the world has moved out of the economic crisis. The research was carried out in light of the current data suggesting people are more risk-averse to loss than they are to gains, contrary to the model of man making choices based on the maximization of value (Kahneman & Tversky, Prospect Theory: An Analysis of Decision Under Risk, 1979). The research consisted of a survey to assess participants' choices in investing €1000 on either option A (lower risk and lower return) or option B (higher risk but higher return). Chi squares, t-tests and supplementary data were used to assess, among other things, for heightened risk aversion and other effects on human cognitive processing. Risk aversion was found to be present in the sample but a significant presence of heightened risk aversion was not found, thus asserting that risk aversion has returned to pre-crisis levels. Additional factors normally considered to affect risk aversion, namely experience in investment, age and gender of investor, were explored as well to study the cognitive processing behind risk aversion. Such factors resulted as well in the negative.
Description: B.PSY.(HONS)
Appears in Collections:Dissertations - FacEdu - 2012

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