On the linkage between financial risk tolerance and risk aversion

Faff, Robert and Mulino, D and Chai, D (2008) On the linkage between financial risk tolerance and risk aversion. Journal of Financial Research, 31 (1). pp. 1-23. ISSN 0270-2592 (https://doi.org/10.1111/j.1475-6803.2008.00229.x)

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Abstract

We explore the linkage between financial risk tolerance (FRT) and risk aversion. To do this, we obtain FRT scores from a psychometrically validated survey and conduct a battery of online lottery choice experiments involving the same nonstudent participants. We contrast: real and hypothetical payoffs, low and high stakes, decisions involving gains and losses, and order effects. Our key finding is that the two approaches to analyzing decision making under uncertainty are strongly aligned. We present evidence that this is particularly the case for the female participants in our sample and when high-stake gambles are employed.

  • Item type:Article
    ID code:41061
    Dates:
    Date
    Event
    2008
    Published
    13 February 2008
    Published Online
    Keywords:linkage, financial risk , tolerance , risk aversion, FRT, online lottery choice experiments , high-stake gambles , Accounting, Finance, Accounting
    Subjects:Social Sciences > Commerce > Accounting
    Department:Strathclyde Business School > Accounting and Finance
    Depositing user: Pure Administrator
    Date deposited:10 Sep 2012 14:40
    Last modified:27 Aug 2021 02:21
    URI:https://strathprints.strath.ac.uk/id/eprint/41061
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