Scoring and Predicting Risk Preferences

Ertek, G., Kaya, M., Kefeli, C., Onur, Ö., Uzer, K. (2012) “Scoring and predicting risk preferences” in Behavior Computing: Modeling, Analysis, Mining and Decision. Eds: Longbing Cao, Philip S. Yu. Springer.

22 Pages Posted: 3 Apr 2018

See all articles by Gurdal Ertek

Gurdal Ertek

Abu Dhabi University; Sabanci University - Sabanci University; Sabanci University

Murat Kaya

Sabanci University

Cemre Kefeli

Sabanci University - FENS, Sabanci University

Özge Onur

Sabanci University - FENS, Sabanci University

Kerem Uzer

Sabanci University - School of Management

Date Written: March 28, 2018

Abstract

This study presents a methodology to determine risk scores of individuals, for a given financial risk preference survey. To this end, we use a regression based iterative algorithm to determine the weights for survey questions in the scoring process. Next, we generate classification models to classify individuals into risk-averse and risk-seeking categories, using a subset of survey questions. We illustrate the methodology through a sample survey with 656 respondents.

We find that the demographic (indirect) questions can be almost as successful as risk-related (direct) questions in predicting risk preference classes of respondents. Using a decision-tree based classification model, we discuss how one can generate actionable business rules based on the findings.

Suggested Citation

Ertek, Gurdal and Kaya, Murat and Kefeli, Cemre and Onur, Özge and Uzer, Kerem, Scoring and Predicting Risk Preferences (March 28, 2018). Ertek, G., Kaya, M., Kefeli, C., Onur, Ö., Uzer, K. (2012) “Scoring and predicting risk preferences” in Behavior Computing: Modeling, Analysis, Mining and Decision. Eds: Longbing Cao, Philip S. Yu. Springer. , Available at SSRN: https://ssrn.com/abstract=3151624

Gurdal Ertek (Contact Author)

Abu Dhabi University ( email )

Abu Dhabi
United Arab Emirates

HOME PAGE: http://ertekprojects.com

Sabanci University - Sabanci University ( email )

Orhanli
Estambul, Tuzla 34956
Turkey

Sabanci University ( email )

School of Management
Orhanli Tuzla
İstanbul, 34956
Turkey

Murat Kaya

Sabanci University ( email )

Sabanci Universitesi MDB Fakultesi
Orhanli Tuzla
Istanbul, 34956
Turkey
90-216-483 9622 (Phone)
90-216-483 9550 (Fax)

HOME PAGE: http://myweb.sabanciuniv.edu/mkaya/

Cemre Kefeli

Sabanci University - FENS, Sabanci University

Orhanli, Tuzla
Istanbul, 34956
Turkey

Özge Onur

Sabanci University - FENS, Sabanci University

Orhanli, Tuzla
Istanbul, 34956
Turkey

Kerem Uzer

Sabanci University - School of Management

Istanbul
Turkey

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