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Don’t fear risk, learn about it: how familiarity reduces perceived risk

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  • Tal Shavit
  • Eyal Lahav
  • Mosi Rosenboim

Abstract

This article suggests that learning about basic concepts concerning the risk and return of assets will reduce perceived risk. We show experimentally that people who learn about these basic concepts are willing to allocate more money to risky assets and consider the asset’s return relative to its risk.

Suggested Citation

  • Tal Shavit & Eyal Lahav & Mosi Rosenboim, 2016. "Don’t fear risk, learn about it: how familiarity reduces perceived risk," Applied Economics Letters, Taylor & Francis Journals, vol. 23(15), pages 1069-1072, October.
  • Handle: RePEc:taf:apeclt:v:23:y:2016:i:15:p:1069-1072
    DOI: 10.1080/13504851.2015.1133892
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    Cited by:

    1. Israel, Avi & Lahav, Eyal & Ziv, Naomi, 2019. "Stop the music? The effect of music on risky financial decisions: An experimental study," Journal of Behavioral and Experimental Finance, Elsevier, vol. 24(C).
    2. Ranjit Singh & Jayashree Bhattacharjee, 2019. "Measuring Equity Share Related Risk Perception of Investors in Economically Backward Regions," Risks, MDPI, vol. 7(1), pages 1-20, January.

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