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

33 Pages Posted: 18 Aug 2020

See all articles by Marco Angrisani

Marco Angrisani

University of Southern California - 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

University College London

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 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: COVID-19, Experimental economics, financial markets professional, risk aversion

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 (July 1, 2020). CEPR Discussion Paper No. DP15108, Available at SSRN: https://ssrn.com/abstract=3674884

Marco Angrisani (Contact Author)

University of Southern California - Center for Economic and Social Research (CESR) ( email )

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Marco Cipriani

Federal Reserve Bank of New York ( email )

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Antonio Guarino

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

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Ryan Kendall

University College London - Department of Economics ( email )

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Julen Ortiz de Zarate

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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