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The theoretical attitude and actual behavior of an individual towards risk

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  • Tavor, Tchai

Abstract

This paper analyzes and compares risk aversion levels in the theoretical attitude and actual behavior of individuals. Theoretical attitude is measured in two different ways, both directly and indirectly. The present research first examines differences between theoretical attitude and behavior. The findings for the entire sample and for the sociodemographic subgroups show that respondents demonstrate a lower risk aversion level in their behavior than in their indirectly measured theoretical attitude. In contrast, individuals are more risk averse in their behavior than in their directly measured theoretical attitude. Next, within the sociodemographic factors, the study compares the average risk aversion levels in directly and indirectly measured theoretical attitude, and in behavior. The sociodemographic subgroups within gender, age, and marital status differ in their risk aversion levels in theoretical attitude, but none of the sociodemographic subgroups differ in the risk aversion level for behavior. Regression results suggest that when an individual indicates he is more risk averse in both his directly and indirectly measured theoretical attitude, he is also more risk averse in his behavior. In addition, a respondent who is older, more religious, or earns a lower income is more risk averse in his behavior.

Suggested Citation

  • Tavor, Tchai, 2019. "The theoretical attitude and actual behavior of an individual towards risk," Journal of Behavioral and Experimental Finance, Elsevier, vol. 23(C), pages 1-11.
    • Handle: RePEc:eee:beexfi:v:23:y:2019:i:c:p:1-11
    DOI: 10.1016/j.jbef.2019.05.005
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    Cited by:

    1. Eva Branten, 2022. "The role of risk attitudes and expectations in household borrowing: evidence from Estonia," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 22(2), pages 126-145.

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    More about this item

    Keywords

    Risk aversion; Risk attitude; Risk perception; Theoretical attitude; Behavior; Self-evaluation bias;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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