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Jean-Francois Gajewski and Luc Meunier
''Risk preferences: are students a reasonable sample to make inferences about the decision-making of finance professionals?''
( 2020, Vol. 40 No.4 )
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.
Keywords: Prospect Theory, Finance Professionals, Loss Aversion, Risk Aversion, Probability Weighting, Experiments
JEL: D8 - Information, Knowledge, and Uncertainty: General
C9 - Design of Experiments: General
Manuscript Received : Oct 16 2019 Manuscript Accepted : Nov 14 2020

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