Studies test investors’ risk aversion after crash

Researchers use March tumult to investigate psychology of risk-taking

risk-fear-crash.jpg

The coronavirus turmoil promised a rare chance to answer an elemental question in finance: does fear change how investors think after a market crash? Two recent studies that explore this debate reach opposing conclusions.

Received wisdom would say investors get skittish after crashes and bolder during booms. The idea is often used to explain why markets boom and bust at all – and has been incorporated into asset pricing models.

But how far these market swings are a product of investors’

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: