Risk Preferences at the Time of COVID-19: An Experiment with Professional Traders and Students

30 Pages Posted: 27 May 2020

See all articles by Marco Angrisani

Marco Angrisani

Center for Economic and Social Research (CESR)

Marco Cipriani

Federal Reserve Bank of New York

Antonio Guarino

University College London - Centre for Economic Learning and Social Evolution (ELSE)

Ryan Kendall

University College London - Department of Economics

Julen Ortiz de Zarate

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: May 2020

Abstract

We study whether the COVID-19 pandemic has impacted risk preferences, comparing the results of experiments conducted before and during the outbreak. In each experiment, we elicit risk preferences from two sample groups: professional traders and undergraduate students. We find that, on average, risk preferences have remained constant for both pools of participants. Our results suggest that the increases in risk premia observed during the pandemic are not due to changes in risk appetite; rather, they are solely due to a change in beliefs by market participants. The findings of our paper support the traditional view that, at least on average, risk preferences are not affected by economic or social circumstances.

Keywords: risk aversion, financial markets professional, COVID-19, experimental economics

JEL Classification: D81, D91, N0

Suggested Citation

Angrisani, Marco and Cipriani, Marco and Guarino, Antonio and Kendall, Ryan and Ortiz de Zarate, Julen, Risk Preferences at the Time of COVID-19: An Experiment with Professional Traders and Students (May 2020). FRB of New York Staff Report No. 927, Available at SSRN: https://ssrn.com/abstract=3609586 or http://dx.doi.org/10.2139/ssrn.3609586

Marco Angrisani

Center for Economic and Social Research (CESR) ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States

Marco Cipriani (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Antonio Guarino

University College London - Centre for Economic Learning and Social Evolution (ELSE) ( email )

Gower Street
London WC1E 6BT
United Kingdom

HOME PAGE: http://www.homepages.ucl.ac.uk/~uctpagu/

Ryan Kendall

University College London - Department of Economics ( email )

Drayton House, 30 Gordon Street
30 Gordon Street
London, WC1H 0AX
United Kingdom

Julen Ortiz de Zarate

affiliation not provided to SSRN

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