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Risk preferences: are students a reasonable sample to make inferences about the decision-making of finance professionals?

Author

Listed:
  • Jean-Francois Gajewski

    (University Jean Moulin Lyon 3, iaelyon, Magellan, France.)

  • Luc Meunier

    (ESSCA, School of Management, Aix-En-Provence, France.)

Abstract

By volume, finance professionals make most financial decisions. However, the experimental literature on risk preferences generally uses students in the lab. If these two groups present systematic differences, the transposition of the experimental results to the real world might be compromised. We investigated whether the risk preferences of wealth advisers differ from those of students in the lab and students in an online experiment. The risk aversion and probability weighting of these groups do not differ significantly. However, male wealth advisers are more loss averse than both samples of male students before considering age. After controlling for age, we find that female wealth advisers are less loss averse than female students. Therefore, we advise some prudence when generalizing experimental results obtained from students to finance professionals for situations in which losses are important. The direct transposition of experimental results from students to finance professionals does not call for such caution when dealing with decisions in the gain domain.

Suggested Citation

  • Jean-Francois Gajewski & Luc Meunier, 2020. "Risk preferences: are students a reasonable sample to make inferences about the decision-making of finance professionals?," Economics Bulletin, AccessEcon, vol. 40(4), pages 3000-3009.
    • Handle: RePEc:ebl:ecbull:eb-19-00915
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    References listed on IDEAS

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    Cited by:

    1. Christoph Huber & Christian König-Kersting & Matteo M. Marini, 2022. "Experimenting with Financial Professionals," Working Papers 2022-07, Faculty of Economics and Statistics, Universität Innsbruck, revised Jun 2024.
    2. Sébastien Duchêne & Adrien Nguyen-Huu & Dimitri Dubois & Marc Willinger, 2021. "Why finance professionals hold green and brown assets? A lab-in-the-field experiment [Pourquoi investir dans le vert et le brun ? Une expérience sur des professionnels de la finance]," Working Papers hal-03285376, HAL.
    3. Sébastien Duchêne & Adrien Nguyen-Huu & Dimitri Dubois & Marc Willinger, 2022. "Risk-return trade-offs in the context of environmental impact: a lab-in-the-field experiment with finance professionals," Working Papers hal-03883121, HAL.
    4. Sébastien Duchêne & Adrien Nguyen-Huu & Dimitri Dubois & Marc Willinger, 2021. "Why finance professionals hold green and brown assets? A lab-in-the-field experiment [Pourquoi investir dans le vert et le brun ? Une expérience sur des professionnels de la finance]," Working Papers hal-03285376, HAL.

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    More about this item

    Keywords

    Prospect Theory; Finance Professionals; Loss Aversion; Risk Aversion; Probability Weighting; Experiments;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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