Risk misperceptions of structured financial products with worst-of payout characteristics revisited

Arbeitspapier

In this paper, we reexamine a bias revealed by Kunz et al. (2017) regarding structured financial products known as barrier reverse convertibles (BRCs) with worst-of payout characteristics. Namely, using a nonincentivized survey of investor risk perceptions, Kunz et al. (2017) found that when safe assets are included with risky assets to provide the underlying assets of a BRC, investors erroneously perceive a lower risk for the BRC when in fact it becomes higher. We confirm the same bias among student participants using the results of an incentivized experiment. However, we do not observe any similar bias among finance professionals.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 1143

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets‡ ; Design of Experiments: Other
• Subject: Experiment ; Barrier Reverse Convertibles

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hanaki, Nobuyuki
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/248602
• Last update: 10.03.2025, 11:42 AM CET