Risk Tolerance: Don’t Ask Me, I’m in a Bad Mood

Posted: 1 Oct 2018

See all articles by Michelle Kruger

Michelle Kruger

University of Georgia - College of Family and Consumer Sciences, Students

John Grable

University of Georgia - Department of Housing & Consumer Economics

Amy Hubble

University of Georgia

Megan E. Ford

University of Georgia

Jamie Lynn Byram

University of Georgia

Gary Clement

University of Georgia - College of Family and Consumer Sciences, Students

Date Written: September 28, 2018

Abstract

The purpose of this poster is to describe a study that was undertaken to determine if an individual’s mood is associated with the individual’s responses to a set of CRRA questions. It was thought that if such an association exists, then it is likely that Loewenstein et al.’s (2001) “risk-as-feelings” hypothesis may be a more appropriate description of the way investors formulate risk preferences compared to a purely analytical model. Further, if an association between mood and CRRA does exist this means that financial planners should take care to evaluate measures of client CRRA in light of client emotional characteristics.

Keywords: risk aversion, risk tolerance, income gambles, constant relative risk aversion

JEL Classification: D14, D81, D9, G11, G41

Suggested Citation

Kruger, Michelle and Grable, John and Hubble, Amy and Ford, Megan E. and Byram, Jamie Lynn and Clement, Gary, Risk Tolerance: Don’t Ask Me, I’m in a Bad Mood (September 28, 2018). 2019 Academic Research Colloquium for Financial Planning and Related Disciplines. Available at SSRN: https://ssrn.com/abstract=3256941

Michelle Kruger

University of Georgia - College of Family and Consumer Sciences, Students ( email )

GA
United States

John Grable (Contact Author)

University of Georgia - Department of Housing & Consumer Economics ( email )

205 Dawson Hall
Athens, GA 30602-3622
United States

Amy Hubble

University of Georgia ( email )

Athens, GA 30602-6254
United States

Megan E. Ford

University of Georgia ( email )

Atlanata
GA
United States

Jamie Lynn Byram

University of Georgia ( email )

Atlanata
GA
United States

Gary Clement

University of Georgia - College of Family and Consumer Sciences, Students ( email )

GA
United States

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