If you have any problems related to the accessibility of any content (or if you want to request that a specific publication be accessible), please contact (scholarworks@unr.edu).
Does Experiencing a Crash Make All the Difference? An Experiment on the Depression Babies Hypothesis
Date
2018Type
ArticleAbstract
Do people who lived through the depression take fewer financial risks because of the negative returns experienced? More generally, what is the importance of historical return streams on current investment decisions? This experiment tests this experience hypothesis and finds that subjects who experience a great crash hold, on average, 6% less of their assets in stocks than subjects who did not experience the crash, after controlling for gender, employment status, and financial literacy. Our results suggest that subjects who experience a significant market crash have lower and more volatile beliefs regarding future stock returns. Furthermore, we find that experiencing a crash causes a significant difference in the overall belief distributions between the two groups, with the crash cohort holding more realistic beliefs about future stock market returns.
Permanent link
http://hdl.handle.net/11714/5237Additional Information
Journal Title | SAGE Open |
---|---|
Rights | Creative Commons Attribution 4.0 International |
Rights Holder | Authors |