On January 25, 2022, Stefan Zeisberger (Radboud University, Netherlands and University of Zurich, Switzerland) presented the paper "What is Risk? How Investors Perceive Risk in Return Distributions" at the TAF Research Seminar.
Most textbook finance literature assumes risk to be the standard deviation of returns (volatility), which is not only used by academics but also financial advisors, regulators and more. The paper studies whether volatility is consistent with investors’ actual perception of risk and documents that the probability of losing is the main driver of risk perception and investment propensity. Volatility on the other hand plays a less important role.
Stefan Zeisberger received his Ph.D. from the University of Münster. Subsequently, he was a visiting researcher at the University of Zurich (Switzerland) and the California Institute of Technology (US), among others. He was Assistant Professor at Stony Brook University (US) before taking over the Chair of Finance at Radboud University (Netherlands) in 2016. Since 2017, he also is a Professor for FinTech and Experimental Finance at the University of Zurich (Switzerland). Zeisberger's research areas focus on behavioral finance and the analysis of financial decision-making, taking into account psychological insights.