We provide a model that can explain empirically relevant variations in confidence and risk taking by combining horizon …-dependent risk aversion (“anxiety”) and selective memory in a Bayesian intrapersonal game. In the time series, overconfidence is more … prevalent when actual risk levels are high, while underconfidence occurs when risks are low. In the cross section, more anxious …

We assess the impact of leverage ratio (LR) requirements on risk-taking behaviour of banks theoretically, using a … regulatory framework with risk-based requirements induces banks to re-optimise, shifting from safer to riskier assets (higher … asset-risk). Yet, this shift wouldn’t be one-for-one due to risk-weight differences, meaning the shift would be associated …

individual financial risk taste changes over time with the background macroeconomic and financial conditions, as well as personal … and subjective exposure to portfolio risk. Considering six different self-assessed facets, we find that risk appetite is … higher during periods of economic growth and lower during periods of recession. Risk taste is however unrelated to time when …

We define a class of risk-taking-neutral (RTN) background risks. These background risks have the property that they … will not alter decisions made with respect to another risk, for individuals with HARA utility. If we wish to compare a … decision made with and without some exogenous background risk, it is often easier to compare the decision made to one made with …

Changes in average FinaMetrica monthly risk tolerance scores were evaluated during the January 2007 to May 2012 time … influence average risk tolerance scores over time. A strong positive correlation (0.70) between average monthly risk tolerance … scores and the S&P 500 was noted. The standard deviation for average monthly risk tolerance scores was relatively low (1 …

arbitrary (but finite) number of projects and the termination time. The optimal policy depends on the projects' risk …-adjusted drifts that are determined by their drifts, volatilities and the curvature (or relative risk aversion) of the agent's payoff … function. We prove that the optimal policy only selects projects in the spanning subset. Further, if the projects' risk …

In a recent article entitled 'Putting Risk in its Proper Place,' Eeckhoudt and Schlesinger (2006) established a theorem … disaggregation of risks across states of nature to the complete structure of moments preferred by mixed risk averse agents. It can be …

We empirically compare the consistency among several measures of risk-taking and patience by evaluating how these …

an increase in ambiguity is associated with increased investor activity. It also leads to a reduction in risk …

labor-income risk can explain much of this risk-taking pattern. Uncontrollable labor-income risk stresses middle …, middle-income households reduce (controllable) financial risk. Richer households, having less pressure, can afford more risk …-taking. The poor take low risk because they avoid jeopardizing their subsistence consumption. …