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Title:Does good advice come cheap? On the assessment of risk preferences in the lab and in the field PDF Logo
Authors:Leuermann, Andrea
Roth, Benjamin
Issue Date:2012
Series/Report no.:SOEPpapers on Multidisciplinary Panel Data Research 475
Abstract:Advice is important for decision making, especially in the financial sector. We investigate how individuals assess risk preferences of others given sociodemographic information or pictures. Both non-professionals and financial professionals participate in this artefactual field experiment. Subjects mainly rely on the other's self-assessment of risk preferences and on gender when forming the belief about someone else's risk preferences. On average, subjects consider themselves to be more risk-tolerant than the person they evaluate. Subjects use their own risk attitude as a reference point for predicting others' risk preferences. This false consensus effect is less pronounced for young professionals than for senior and non-professionals. Furthermore, financial professionals predict risk preferences more accurately compared to non-professionals.
Subjects:risk preferences
financial advice
artefactual field experiment
behavioral finance
JEL:C91
D81
G02
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
SOEPpapers on Multidisciplinary Panel Data Research, DIW

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