Risk Tolerance in Financial Decision Making

Economics, psychology and neuroscience have converged into a single field under the label of neuroeconomics, aimed to employ recent neuroscientific methods to analyse economically relevant brain processes. This innovative field has repeatedly reveated deviations from the classical theory of economists by highlighting that subjects show dysfunctional behaviours which cannot be explained using traditional methods.

This book focuses on the risk tolerance which influences financial decision making. It holds the results of an empirical research investigating the emotional side of risk-taking behaviour. A unique experiment was run on more than 400 subjects: bank customers, bankers, asset managers and traders, using both traditional and innovative risk measures. By comparing different risk profiles, relevant implications for market participants and regulators emerge, especially if connected to the new regulations introduced by MiFID, in terms of transparency between intermediaries and customers.

Caterina Lucarelli is Associate Professor at the Department of Economics, Polytechnic University of Marche, Italy. She is the national coordinator of the research on risk tolerance in investment and debt decision, supported by the Italian Ministry of University and Research. She has published several contributions in national and international peer reviewed journals and books.
Gianni Brighetti is Associate Professor at the Department of Psychology, University of Bologna, Italy. He is also Director of their Postgraduate School in Health Psychology, as well as BIOlab and the Center for Affective Neuroscience. He has published several contributions in national and international peer reviewed journals and books.