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Risk Preferences at the Time of COVID-19: An Experiment with Professional Traders and Students

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  • Cipriani, Marco
  • Angrisani, Marco
  • Guarino, Antonio
  • Kendall, Ryan
  • Ortiz de Zarate Pina, Julen

Abstract

We study whether the COVID-19 pandemic has impacted risk preferences, comparing the results of experiments conducted before and during the outbreak. In each experiment, we elicit risk preferences from two sample groups: professional traders and undergraduate students. We find that, on average, risk preferences have remained constant for both pools of participants. Our results suggest that the increases in risk premia observed during the pandemic are not due to changes in risk appetite; rather, they are solely due to a change in beliefs by market participants. The findings of our paper support the traditional view that, at least on average, risk preferences are not affected by economic or social circumstances.

Suggested Citation

  • Cipriani, Marco & Angrisani, Marco & Guarino, Antonio & Kendall, Ryan & Ortiz de Zarate Pina, Julen, 2020. "Risk Preferences at the Time of COVID-19: An Experiment with Professional Traders and Students," CEPR Discussion Papers 15108, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15108
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    More about this item

    Keywords

    Risk aversion; Financial markets professional; Covid-19; Experimental economics;
    All these keywords.

    JEL classification:

    • 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
    • N0 - Economic History - - General

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