The Implications for Market Participants and Regulators
The overall empirical findings of our study on risk tolerance are two-fold: on the one hand, we revealed relevant incoherencies among alternative measures of risk tolerance, on the investment side of decision processes. On the other hand, we found that unknown psychological drivers affect the choice to assume debts, especially with regard to unsecured debts. The commonly shared trait of these results is that a large number of dysfunctional behaviours take place when financial decisions are considered. It is thus evidently true that correct knowledge of human mental processing is essential to control conscious/responsible investing and lending.
KeywordsMarket Participant Trading Performance Risk Tolerance Financial Education Consumer Credit
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