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An investigation into risk propensity in bull and bear markets

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  • John Garvey

Abstract

This paper addresses the primary contribution of prospect theory against the landscape of an individual's self-attributed risk propensity. Risk propensity is captured using the IPI psychometric questionnaire for a sample of 521 participants. Participants are also presented with probability-based decisions, that are framed as both negative and positive prospects. Results show that personality constructs, specifically risk-taking, become a consistent and emerging factor in decision-making within the positive domain. In the negative domain, personality constructs associated with risk become more muted and are less likely to be a factor in decision-making.

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  • John Garvey, 2010. "An investigation into risk propensity in bull and bear markets," Journal of Risk Research, Taylor & Francis Journals, vol. 13(6), pages 789-804, September.
    • Handle: RePEc:taf:jriskr:v:13:y:2010:i:6:p:789-804
    DOI: 10.1080/13669870903560283
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