An investigation into risk propensity in bull and bear markets

This paper addresses the primary contribution of prospect theory against the landscape of an individual's self-attributed risk propensity. Risk propensity is captured using the IPI psychometric questionnaire for a sample of 521 participants. Participants are also presented with probability-based decisions, that are framed as both negative and positive prospects. Results show that personality constructs, specifically risk-taking, become a consistent and emerging factor in decision-making within the positive domain. In the negative domain, personality constructs associated with risk become more muted and are less likely to be a factor in decision-making.