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Gender, risk tolerance, and false consensus in asset allocation recommendations

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  • Bollen, Nicolas P.B.
  • Posavac, Steven

Abstract

We study the impact of gender on asset allocation recommendations. Graduate business students and professional wealth managers are randomly assigned a male or female client. Participants recommend an allocation and choose an allocation for themselves. Male students choose a riskier allocation than female students, consistent with existing evidence of a gender difference in risk tolerance, and recommend a riskier allocation. In contrast, male and female wealth managers choose and recommend the same allocation, indicating that male and female finance professionals feature similar risk preferences. In both samples, a subject's allocation choice is the strongest predictor of the recommendation provided.

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  • Bollen, Nicolas P.B. & Posavac, Steven, 2018. "Gender, risk tolerance, and false consensus in asset allocation recommendations," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 304-317.
    • Handle: RePEc:eee:jbfina:v:87:y:2018:i:c:p:304-317
    DOI: 10.1016/j.jbankfin.2017.10.016
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    2. Safdar Ullah Khan & Satyanarayana Ramella & Habib Ur Rahman & Zulfiqar Hyder, 2022. "Household Portfolio Allocations: Evidence on Risk Preferences from the Household, Income, and Labour Dynamics in Australia (HILDA) Survey Using Tobit Models," JRFM, MDPI, vol. 15(4), pages 1-13, April.
    3. Yu, Shi & Wang, Haoran & Dong, Chaosheng, 2023. "Learning risk preferences from investment portfolios using inverse optimization," Research in International Business and Finance, Elsevier, vol. 64(C).
    4. Yi Luo & Steven E. Salterio, 2022. "The Effect of Gender on Investors’ Judgments and Decision-Making," Journal of Business Ethics, Springer, vol. 179(1), pages 237-258, August.
    5. Cupák, Andrej & Fessler, Pirmin & Schneebaum, Alyssa, 2021. "Gender differences in risky asset behavior: The importance of self-confidence and financial literacy," Finance Research Letters, Elsevier, vol. 42(C).
    6. Eiji Yamamura, 2021. "The Effect of Providing Peer Information on Evaluation for Gender Equalized and ESG Oriented Firms: An Internet Survey Experiment," Papers 2105.12292, arXiv.org.
    7. Jianmei Zhao & Lele Zhao, 2022. "Mobile payment adoption and the decline in China’s household savings rate," Empirical Economics, Springer, vol. 63(5), pages 2513-2537, November.
    8. Baeckström, Ylva & Tosun, Onur Kemal & Riefler, Raul, 2024. "Wealth as a moderating effect on gender differences in portfolio holdings," Global Finance Journal, Elsevier, vol. 60(C).
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    More about this item

    Keywords

    Risk tolerance; Gender; Asset allocation;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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