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Risk‐taking begets risk‐taking: Evidence from casino openings and investor portfolios

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  • Chi Liao

Abstract

We provide evidence that casino openings can have spillover effects on an individual's portfolio risk‐taking. Using investor‐level brokerage data and the initial legalization and opening of commercial casinos in the United States as a quasi‐natural experiment, we find that, after a casino opens in close geographical proximity to investors, those with a high propensity to gamble (PTG) increase their idiosyncratic portfolio risk by 12.88% relative to those unlikely to gamble. This effect lasts for approximately 3 months and does not affect systematic portfolio risk. These results suggest that increased access to gambling can temporarily increase portfolio risk‐taking for those with a PTG.

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  • Chi Liao, 2023. "Risk‐taking begets risk‐taking: Evidence from casino openings and investor portfolios," The Financial Review, Eastern Finance Association, vol. 58(1), pages 143-165, February.
    • Handle: RePEc:bla:finrev:v:58:y:2023:i:1:p:143-165
    DOI: 10.1111/fire.12315
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    References listed on IDEAS

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