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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: The risk perceptions of individual investors
Author(s): Veld, Chris
Veld-Merkoulova, Yulia V
Keywords: Individual investors
Risk profile
Downside risk measures
Experimental questionnaire study
Risk perception
Issue Date: Apr-2008
Date Deposited: 10-Apr-2008
Citation: Veld C & Veld-Merkoulova YV (2008) The risk perceptions of individual investors. Journal of Economic Psychology, 29 (2), pp. 226-252.;
Abstract: Risk perceptions of individual investors are studied by asking experimental questions to 2,226 members of a consumer panel. Their responses are analyzed in order to find which risk measures they implicitly use. We find that most investors implicitly use more than one risk measure. For those investors who systematically perceive risk according to the same risk measure, semi-variance of returns is most popular. Semi-variance is similar to variance, but only negative deviations fro the mean or another benchmark are taken into account. Stock investors implicitly choose for semi-variance as a risk measure, while bond investors favor probability of loss. Investors state that they consider the original investment to be the most important benchmark, followed by the risk-free rate of return, and the market return. However, their choices in the experimental questionnaire study reveal that the market return is the most important benchmark.
DOI Link: 10.1016/j.joep.2007.07.001
Rights: Published in Journal of economic psychology by Elsevier

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