41 Pages Posted: 25 May 2007
Date Written: May 2007
This is a PDF file of 'A Literature Review of Risk Perception Studies in Behavioral Finance: The Emerging Issues' slides from a presentation at the 25th Annual Meeting of the Society for the Advancement of Behavioral Economics (SABE) Conference hosted by New York University on May 15-18, 2007.
The topic of risk perception is a noteworthy theme within the behavioral finance literature that examines the decision making process of unsophisticated and expert investors. The risk perception literature has a strong historical academic foundation that entails various attributes associated with the notion of the interdisciplinary and multidisciplinary perspective across the different fields such as behavioral finance, behavioral accounting, and psychology. The previous narrative risk perception literature review by Ricciardi (2004) demonstrated that scholars in financial psychology (behavioral finance), behavioral economics, and behavioral accounting have investigated and tested over 150 unique accounting, financial, and investment proxy risk factors (e.g., beta, current ratio) and more than 100 behavioral risk characteristics (e.g., overconfidence, familiarity bias). This presentation is a preliminary discussion that builds on the research work of Ricciardi (2004, 2006) and Ricciardi (2008). This presentation disclosed, 'What are the emerging issues within the behavioral finance risk perception literature?' In particular, this presentation provided an emerging collection of hypotheses based on the various theories, concepts, and themes from the earlier narrative literature review by Ricciardi (2004) and the forthcoming book chapter in Ricciardi (2008).
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Keywords: risk perception, perceived risk, risk analysis, risk management, risk communication, objective risk, subjective risk, behavioral accounting, behavioral economics, standard finance, behavioural finance, psychology, financial psychology, social sciences, risk, beta
JEL Classification: A12, D81, G00, G30, G10, M00, M10, M41
Suggested Citation: Suggested Citation
Ricciardi, Victor, A Literature Review of Risk Perception Studies in Behavioral Finance: The Emerging Issues (May 2007). Available at SSRN: https://ssrn.com/abstract=988342 or http://dx.doi.org/10.2139/ssrn.988342
By Andrew Lo
By Eugene Fama