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How good are LLMs in risk profiling?

Author

Listed:
  • Thorsten Hens

    (University of Zurich - Department of Banking and Finance; Norwegian School of Economics and Business Administration (NHH); Swiss Finance Institute)

  • Trine Nordlie

    (Norwegian School of Economics (NHH))

Abstract

This study compares OpenAI’s ChatGPT-4 and Google’s Bard with bank experts in determining investors’ risk profiles. We find that for half of the client cases used, there are no statistically significant differences in the risk profiles. Moreover, the economic relevance of the differences is small. However, the LLMs are not good in explaining the risk profiles.

Suggested Citation

  • Thorsten Hens & Trine Nordlie, 2024. "How good are LLMs in risk profiling?," Swiss Finance Institute Research Paper Series 24-30, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2430
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4810626
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    More about this item

    Keywords

    Large Language Models; ChatGPT; Bard; Risk Profiling;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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