Work

Communicating Asset Risk : how the format of historic volatility information affects risk perception and investment decisions

Year: 2000

Type: preprint

Abstract: An experiment examined the effect that the type and presentation format of information about investment options have on expectations held by investors about asset risk, returns, and volatility. Some respondents were provided with the names of investment options in addition to historical (1987-97) volatility data, and some were not. Historical volatility was presented either as a bar graph of returns per year or as a continuous density distribution of returns over the 10-year period. Risk and volatility perceptions both varied significantly as a function of type and format of information, but in different ways. Biases in risk perception, but not in volatility forecasts, affected portfolio decisions.

Source: RePEc: Research Papers in Economics

Authors: Niklas Siebenmorgen, Elke U. Weber, Matthias Weber

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: green

Funders: National Science Foundation, Deutsche Forschungsgemeinschaft, Universität Mannheim

Awards: G2846299926, Collaborative Research: Predicting Modes of Decision-Making: A Cross-Cultural and Mutli-Method Approach

OpenAlex ID: W1582193125

Cites: 21

Cited by: 12

Related to: 10