VGSF - WU Vienna - LC

Phillipp Gnan, Vienna University of Economics and Business (WU Wien)

Campus WU D3.0.233 and via MS Teams 12:00 - 13:00

Organizer WU Vienna

The Fin­ance Brown Bag Sem­inar is held by the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance (WU Vi­enna) and the Vi­enna Gradu­ate School of Fin­ance (VGSF). It serves as a present­a­tion plat­form for PhD stu­dents, fac­ulty mem­bers, and vis­it­ors. An over­view of BBS on the web­site of the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance.


Phil­lipp Gnan, Vi­enna Uni­versity of Eco­nom­ics and Busi­ness (WU Wien)

Re­vis­it­ing Dis­count Rates: New Evid­ence from Sur­veys

(with Max­imilian Schler­itzko)

This pa­per stud­ies re­tail in­vestors’ risk-re­turn trade-off. Ex­ist­ing evid­ence from sur­veys sug­gests that house­holds ex­pect lower re­turns, i.e., lower risk com­pens­a­tion, in bad times. Us­ing a dir­ect meas­ure of re­tail in­vestors’ sub­ject­ive dis­count rates, we find that re­quired com­pens­a­tion for risk nev­er­the­less rises with per­cep­tions of stock mar­ket risk. This find­ing res­on­ates well with long-es­tab­lished prin­ciples in as­set pri­cing. We also show that dis­count rates and per­ceived risk are more tightly con­nec­ted for fin­an­cially lit­er­ate re­tail in­vestors and dur­ing times of fin­an­cial and eco­nomic dis­tress. Our res­ults have im­port­ant im­plic­a­tions for mod­el­ling house­holds’ risk-re­turn trade-off and the design of fu­ture sur­veys eli­cit­ing re­turn ex­pect­a­tions.

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