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Past Experiences, Personality Traits, and Risk Aversion: Evidence from Individual Risk Attitudes during the COVID-19 Pandemic

Author

Listed:
  • Yun Wang

    (School of Economics, Renmin University of China, Beijing 100872, China)

  • Mingyang Yan

    (The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen 361005, China)

Abstract

Individuals¡¯ risk attitudes play an important role in economic decision making and policy evaluation, particularly in the midst of unprecedented uncertainty caused by the COVID-19 pandemic. We adopt a multiple-price-list elicitation method with real money incentives to measure precisely individuals¡¯ risk attitudes at different stake levels and the extent to which they are affected by personal and social shocks following the COVID-19 outbreak in China. We find that subjects who had previously experienced negative personal shocks are more risk-averse at medium and large stakes but more risk loving at very small stakes. For our sample, COVID-19 has no significant impact on risk attitudes, as it is more likely to be regarded as a social shock. The result indicates that the impact of COVID-19 on individual risk attitudes is not as influential as expected, unless the individual¡¯s personal life is affected directly.

Suggested Citation

  • Yun Wang & Mingyang Yan, 2020. "Past Experiences, Personality Traits, and Risk Aversion: Evidence from Individual Risk Attitudes during the COVID-19 Pandemic," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 15(4), pages 575-625, December.
    • Handle: RePEc:fec:journl:v:15:y:2020:i:4:p:575-625
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-011-020-0024-4
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    Cited by:

    1. Khurram Ajaz Khan & Zdenko Metzker & Justas Streimikis & John Amoah, 2023. "Impact of negative emotions on financial behavior: An assessment through general strain theory," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 18(1), pages 219-254, March.

    More about this item

    Keywords

    risk attitude; risk instability; behavioral economics; negative shock; COVID-19 pandemic;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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