Journal ArticleDOI
Communicating asset risk: how name recognition and the format of historic volatility information affect risk perception and investment decisions.
TLDR
An experiment examined how the type and presentation format of information about investment options affected investors' expectations about asset risk, returns, and volatility and how these expectations related to asset choice.Abstract:
An experiment examined how the type and presentation format of information about investment options affected investors' expectations about asset risk, returns, and volatility and how these expectations related to asset choice. Respondents were provided with the names of 16 domestic and foreign investment options, with 10-year historical return information for these options, or with both. Historical returns were presented either as a bar graph of returns per year or as a continuous density distribution. Provision of asset names allowed for the investigation of the mechanisms underlying the home bias in investment choice and other asset familiarity effects. Respondents provided their expectations of future returns, volatility, and expected risk, and indicated the options they would choose to invest in. Expected returns closely resembled historical expected values. Risk and volatility perceptions both varied significantly as a function of the type and format of information, but in different ways. Expected returns and perceived risk, not predicted volatility, predicted portfolio decisions.read more
Citations
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International Encyclopedia of the Social and Behavioral Sciences (vol. 10)
N.J. Smelser,Paul B. Baltes +1 more
Journal ArticleDOI
What shapes perceptions of climate change
TL;DR: In this paper, the authors argue that affect-based decisions about climate change are unlikely to motivate significant action, as politicians and the general public are not particularly worried about climate risks, and because attempts to scare people into greater action may have unintended negative consequences.
Posted Content
Mindful Judgment and Decision Making
Elke U. Weber,Eric Johnson +1 more
TL;DR: "Mindful"
Journal ArticleDOI
Mindful judgment and decision making
Elke U. Weber,Eric Johnson +1 more
TL;DR: A full range of psychological processes have been put into play to explain judgment and choice phenomena as mentioned in this paper, including automatic processes, automatic processes have gotten closer attention, and the emotions revolution has put affective processes on a footing equal to cognitive ones.
Journal ArticleDOI
If It's Difficult to Pronounce, It Must Be Risky Fluency, Familiarity, and Risk Perception
Hyunjin Song,Norbert Schwarz +1 more
TL;DR: Low processing fluency fosters the impression that a stimulus is unfamiliar, which in turn results in perceptions of higher risk, independent of whether the risk is desirable or undesirable.
References
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Book
Hierarchical Linear Models: Applications and Data Analysis Methods
TL;DR: The Logic of Hierarchical Linear Models (LMLM) as discussed by the authors is a general framework for estimating and hypothesis testing for hierarchical linear models, and it has been used in many applications.
Journal ArticleDOI
Hierarchical Linear Models: Applications and Data Analysis Methods.
TL;DR: This chapter discusses Hierarchical Linear Models in Applications, Applications in Organizational Research, and Applications in the Study of Individual Change Applications in Meta-Analysis and Other Cases Where Level-1 Variances are Known.
Journal ArticleDOI
Efficient capital markets: a review of theory and empirical work*
TL;DR: Efficient Capital Markets: A Review of Theory and Empirical Work Author(s): Eugene Fama Source: The Journal of Finance, Vol. 25, No. 2, Papers and Proceedings of the Twenty-Eighth Annual Meeting of the American Finance Association New York, N.Y. December, 28-30, 1969 (May, 1970), pp. 383-417 as mentioned in this paper
Journal ArticleDOI
Capital asset prices: a theory of market equilibrium under conditions of risk*
TL;DR: In this paper, the authors present a body of positive microeconomic theory dealing with conditions of risk, which can be used to predict the behavior of capital marcets under certain conditions.
Posted Content
Risk as Feelings
TL;DR: It is shown that emotional reactions to risky situations often diverge from cognitive assessments of those risks, and when such divergence occurs, emotional reactions often drive behavior.
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