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Vlaev, Ivo, Kusev, Petko, Stewart, Neil, Aldrovandi, Silvio and Chater, Nick (2010) Domain effects and financial risk attitudes. Risk Analysis, Vol.30 (No.9). pp. 1374-1386. doi:10.1111/j.1539-6924.2010.01433.x ISSN 0272-4332.
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Official URL: http://dx.doi.org/10.1111/j.1539-6924.2010.01433.x
Abstract
We investigated whether financial risk preferences are dependent on the financial domain (i.e., the context) in which the risky choice options are presented. Previous studies have demonstrated that risk attitudes change when gambles are framed as gains, losses, or as insurance. Our study explores this directly by offering choices between identical gambles, framed in terms of seven financial domains. Three factors were extracted, explaining 68.6% of the variance: Factor 1 (Positive)-opportunity to win, pension provision, and job salary change; Factor 2 (Positive-Complex)-investments and mortgage buying; Factor 3 (Negative)-possibility of loss and insurance. Inspection of the solution revealed context effects on risk perceptions across the seven scenarios. We also found that the commonly accepted assumption that women are more risk averse cannot be confirmed with the context structure suggested in this research; however, it is acknowledged that in the students' population the variance across genders might be considerably less. These results suggest that our financial risk attitude measures may be tapping into a stable aspect of "context dependence" of relevance to real-world decision making.
| Item Type: | Journal Article | ||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HM Sociology |
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Science, Engineering and Medicine > Science > Psychology Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Financial risk, Risk perception, Risk assessment | ||||
| Journal or Publication Title: | Risk Analysis | ||||
| Publisher: | Wiley-Blackwell Publishing Ltd. | ||||
| ISSN: | 0272-4332 | ||||
| Official Date: | September 2010 | ||||
| Dates: |
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| Volume: | Vol.30 | ||||
| Number: | No.9 | ||||
| Number of Pages: | 13 | ||||
| Page Range: | pp. 1374-1386 | ||||
| DOI: | 10.1111/j.1539-6924.2010.01433.x | ||||
| Status: | Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Funder: | Economic and Social Research Council (Great Britain) (ESRC), British Academy (BA), Nuffield Foundation | ||||
| Grant number: | R000239351 (ESRC), SGS/36177 (NF), SG091144 (BA) |
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