Market shocks and professionals' investment behavior – Evidence from the COVID-19 crash

Christoph Huber, Juergen Huber and Michael Kirchler

No fgxpb, OSF Preprints from Center for Open Science

Abstract: We investigate how the experience of stock market shocks, such as the COVID-19 crash, influences risk-taking behavior. To isolate changes in risk taking from other factors during stock market crashes, we ran controlled experiments with finance professionals in December 2019 and March 2020. We observe that their investments in the experiment were 12 percent lower in March 2020 than in December 2019, although their price expectations had not changed, and although they considered the experimental asset less risky during the crash than before. Thus, lower investments are driven by higher risk aversion, not by changes in beliefs.

Date: 2020-05-20
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Market shocks and professionals’ investment behavior – Evidence from the COVID-19 crash (2021)
Working Paper: Market shocks and professionals' investment behavior - Evidence from the COVID-19 crash (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:fgxpb

DOI: 10.31219/osf.io/fgxpb

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