Join us for an ICES Occasional Brown Bag Lecture featuring Benjamin Roth.
Roth, of the University of Heidelberg (Germany), will discuss his paper (co-authored with Andrea Leuermann) On the Prediction of Risk Preferences of Others. The talk will take place on Thursday, October 4th, from 12:00 to 1:00pm, in room 400-R of the Truland Building, Arlington campus.
Coffee and dessert will be provided.
If you plan to attend, please RSVP with Stan Tsirulnikov.
Please visit the Brown Bag Schedule learn more about upcoming brown bags.
Many risky decisions are delegated to professionals, such as financial advisors or doctors. In order to give good advice, advisors have to predict the risk preferences of their advisees properly. We present results from two studies on the prediction of risk preferences. First, we investigate how individuals assess risk preferences of others given sociodemographic information. Both non-professionals and financial professionals participate in this artefactual field experiment. We find that advisors largely rely on the other’s self-assessment of risk preferences and on gender when forming their belief about the advisee’s risk preferences. On average, subjects consider themselves to be more risk-tolerant than the person they evaluate. Furthermore, subjects use their own risk attitude as a reference point for predicting others’ risk preferences. Professional advisors are found to predict the risk preferences more accurately compared to non-professionals. In a second study we investigate whether personal interaction improves the prediction of risk preferences. We study the assessment of risk preferences of others under two conditions: either the subjects meet personally or they make their assessment given only sociodemographic information. By employing a within-subject design, we explore the prediction accuracy of risk preferences under both conditions. Our results indicate that personal interaction does not improve the prediction of risk preferences of others.