The salience of Informed Risk: an experimental analysis

Santorsola, Marco and Caferra, Rocco and Morone, Andrea (2021): The salience of Informed Risk: an experimental analysis.

Abstract

During the last decade, scholars and policy makers have increasingly concentrated on investors’ excessive risk taking. By conducting an online pair-wise lottery choice experiment, we assess for variations in the level of risk taken when altering the research frame. For instance, in our experimental treatments we affect subjects’ awareness about the risk-taking decision by displaying or not displaying (financial) risk warning messages with different intensity. We also carry out additional robustness checks searching for possible relations between risk aversion, cognitive ability and questionnaire- based risk aversion scores. Our results provide statical evidence for the efficacy of informative and very salient messages in mitigating risky decision, offering several policy implications. The intuitions, deriving from a 177-subject sample, could indeed provide useful insights for designing effective risk reduction policies and maybe be applicable not only to a financial market context but also by extension to other risk-taking activities, i.e., online betting and gambling.

• Item Type: MPRA Paper
• Language: English
• Keywords: Individual decision-making; risk; experimental economics; Information effect; Finance.
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments

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