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Original Articles

Don’t fear risk, learn about it: how familiarity reduces perceived risk

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Pages 1069-1072 | Published online: 08 Jan 2016
 

ABSTRACT

This article suggests that learning about basic concepts concerning the risk and return of assets will reduce perceived risk. We show experimentally that people who learn about these basic concepts are willing to allocate more money to risky assets and consider the asset’s return relative to its risk.

JEL CLASSIFICATION:

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 There is no difference between the average allocation of the before group in problem 2 and problem 3 (two-tailed Wilcoxon signed ranks test: Z = 0.07; p = 0.95).

2 There is no difference between the average allocation of the after group in problem 2 and problem 3 (two-tailed Wilcoxon signed ranks test: Z = 0.17; p = 0.87).

3 There were three students who did not answer this question.

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