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- W3205022018 abstract "• Many decision makers miscalibrate their willingness to take risk (they either over- or under-estimate their true risk tolerance). • Decision makers who systematically under-estimated their financial risk tolerance were observed to hold portfolios that were less risky. • Decision makers tend to hold more risky portfolios when their subjective and objective risk tolerance is calibrated. • No clear pattern of portfolio choice for those who over-estimated their financial risk tolerance was noted. • Being female and between the age of 55 to 64, having an income of $100,000 or more, and working with a financial advisor were found to be more consistent descriptors of portfolio risk. The purpose of the study was to analyze the degree to which categories of financial risk-tolerance miscalibration are associated with portfolio choices made by financial decision-makers. A differential prediction model was applied to investment risk tolerance data from 2017 to 2018 to assess the presence of miscalibration. Results from Tobit regressions showed that some survey respondents did engage in the miscalibration of their financial risk tolerance. Although results varied by sub-samples, those who systematically under-estimated their financial risk tolerance were observed to hold portfolios that were less risky than those who were able to match their self-assessed risk tolerance to their psychometrically reliable score. No clear pattern of portfolio choice for those who over-estimated their financial risk tolerance was noted. Being female and between the age of 55 to 64, having an income of $100,000 or more, and working with a financial advisor were found to be more consistent descriptors of portfolio risk compared to risk-tolerance miscalibration." @default.
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- W3205022018 date "2022-05-01" @default.
- W3205022018 modified "2023-09-26" @default.
- W3205022018 title "Can portfolio risk be described with estimates of financial risk tolerance calibration?" @default.
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- W3205022018 doi "https://doi.org/10.1016/j.frl.2021.102492" @default.
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