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Does good advice come cheap? - On the assessment of risk preferences in the lab and the field

Leuermann, Andrea and Roth, Benjamin

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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 fi nancial 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 eff ect is less pronounced for young professionals than for senior and non-professionals. Furthermore, financial professionals predict risk preferences more accurately compared to non-professionals.

Item Type: Working paper
Date Deposited: 03. Aug 2012 14:14
Date: 2012
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: Risk Preferences , Financial Advice , Artefactual Field Experiment , Behavioral Finance
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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