Measuring risk tolerance in finance: Does the decision frame matter?

Date

2013-06-01

Author

Özdemir, Özlem

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Risk taking behavior has great influence on the decision making process of individuals. In this respect, the methodology used in assessing individuals’ risk tolerance becomes an important issue. However, there is lack of unique and commonly used risk tolerance measure in literature. There are mainly two different approaches in measuring risk tolerance in literature; lottery versus financial risk assessment technique (FRT). The purpose of this study is to investigate whether measurement techniques differ with different decision frames (choosing lotteries as gambling decision frame and choosing portfolio etc. as investment decision). The results show that these two different risk assessment instruments differ when measured through using lottery versus investment questions (individuals tend to be more risk tolerant when they make investment decisions). However, two different financial risk assessment instruments fall into the same line.

Subject Keywords

Risk tolerance, Risk measurement and risk attitudes, Risk kabullenme düzeyi, Risk düzeyinin ölçümü ve riske bakış açısı

URI

https://hdl.handle.net/11511/79394
https://dergipark.org.tr/en/download/article-file/107797

Journal

Kahramanmaraş Sütçü İmam Üniversitesi Sosyal Bilimler Dergisi

Collections

Department of Business Administration, Article

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Citation Formats

Ö. Özdemir, “Measuring risk tolerance in finance: Does the decision frame matter?,” Kahramanmaraş Sütçü İmam Üniversitesi Sosyal Bilimler Dergisi, pp. 275–287, 2013, Accessed: 00, 2021. [Online]. Available: https://hdl.handle.net/11511/79394.