Volatility shocks and investment behavior

Christoph Huber, Jürgen Huber, Michael Kirchler

Publication: Scientific journalJournal articlepeer-review

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Abstract

We investigate how volatility shocks affect investors risk-taking, risk perception and forecasts. We run artefactual field experiments with two participant pools (finance professionals and students), differing in (i) the direction of the shock (down, up, or a neutral case) and (ii) the presentation format of the time series (prices or returns). Professionals investments are negatively associated with the price change and performance of the stock and their perceived risk increases to a similar extent following shocks of all directions. Students risk perception, in contrast, is more closely related to the frequency of negative returns rather than an increase in volatility.
Original languageEnglish
Pages (from-to)56 - 70
JournalJournal of Economic Behavior and Organization
Volume194
DOIs
Publication statusPublished - 2022

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502053 Economics
  • 502047 Economic theory
  • 502009 Corporate finance

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