Hindsight Bias and Individual Risk Attitude within the Context of Experimental Asset Markets

20 Pages Posted: 6 Nov 2002

See all articles by Tarek Josef el Sehity

Tarek Josef el Sehity

Institute of Cognitive Sciences and Technologies; Institute of Psychology

Hans Haumer

Wealth Architecture GmbH

Christian Helmenstein

Institute for Advanced Studies

Erich Kirchler

University of Vienna - Faculty of Psychology

Boris Maciejovsky

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Abstract

This paper investigates (i) the robustness of hindsight bias in experimental asset markets, (ii) the time invariance of the different experimental risk elicitation methods of certainty equivalents and binary lottery choices, and (iii) their correspondence. The results of our within-subjects approach with 133 traders do not support the conjecture that hindsight bias is a general phenomenon. Furthermore, our findings challenge the presumption of time-stable risk preferences and of procedural invariance with respect to different experimental risk elicitation methods.

Keywords: Hindsight bias, Risk attitude, Financial markets, Experimental economics, Behavioral finance

JEL Classification: C90, G10, D81

Suggested Citation

el Sehity, Tarek Josef and Haumer, Hans and Helmenstein, Christian and Kirchler, Erich and Maciejovsky, Boris, Hindsight Bias and Individual Risk Attitude within the Context of Experimental Asset Markets. Available at SSRN: https://ssrn.com/abstract=311826 or http://dx.doi.org/10.2139/ssrn.311826

Tarek Josef El Sehity

Institute of Cognitive Sciences and Technologies ( email )

Via San Martino della Battaglia 44
Roma, RM 00185
Italy

HOME PAGE: http://cnr-it.academia.edu/TarekelSehity

Institute of Psychology ( email )

Freudplatz 1
Vienna, 1020
Austria
+43 664 7394 9337 (Phone)
+43 1 798 40 98 20 (Fax)

HOME PAGE: http://www.sehity.com

Hans Haumer

Wealth Architecture GmbH ( email )

Schoemergasse 28
A-3400 Klosterneuburg
Austria

Christian Helmenstein

Institute for Advanced Studies ( email )

Stumpergasse 56
A-1060 Vienna, A-1060
Austria

Erich Kirchler

University of Vienna - Faculty of Psychology ( email )

Universitaetsstrasse 7
Vienna, A-1010
Austria
+43 1 42 7747332 (Phone)
+43 1 42 7747339 (Fax)

HOME PAGE: http://homepage.univie.ac.at/erich.kirchler

Boris Maciejovsky (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany
+49 3641 686626 (Phone)
+49 3641 686623 (Fax)

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