The less you know, the more you are afraid of? A survey on risk perception of investment products

Group K

1. 
   Introduction:
   

Investing in financial products often involves a trade-off between potential returns and the perceived risks. This study aims to explore the relationship between investors' knowledge levels and their perceptions of risk associated with investment products. The hypothesis is that individuals with less knowledge about investment products may exhibit higher levels of fear or apprehension related to perceived risks.

Investment risk perceptions:

1. 
   Cognitive Biases: Investors with limited knowledge may be more prone to seeking information that confirms their existing fears. This bias could lead to an overestimation of risks associated with investment products.
   
2. 
   Overconfidence Bias: Investors with less knowledge might be overly confident in their fear-based perceptions, assuming they have a comprehensive understanding of potential risks.
   
3. 
   Information Asymmetry: Lack of Information - The statement implies that fear arises from a lack of knowledge. However, it overlooks situations where investors might have incomplete or misleading information, leading to inaccurate risk perceptions.
   
4. 
   Loss Aversion: Investors, especially those with limited knowledge, might be more averse to potential losses. This emotional bias can intensify fear even when risks are objectively moderate.
   
5. 
   Temporal Discounting: Investors with less knowledge might prioritize short-term fears over long-term benefits, leading to a skewed risk perception that focuses on immediate concerns.
   
6. 
   Fear of Regret: Investors with limited knowledge might be more fearful of making investment decisions they later regret. This fear could hinder decision-making and lead to suboptimal choices.
   

2. 
   
   
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