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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Author(s)
Rogerio Batista Adelino, Leonardo Fernando Cruz Basso
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DOI:10.17265/1537-1506/2022.02.002
Affiliation(s)
Mackenzie Presbyterian University, Sao Paulo, Brazil
ABSTRACT
The traditional finance approach to decision analysis, based on neo-classical economics, assumes self-interested, utility maximizing approach, and risk aversion. This essay points to a situation that investment in a risky asset (Bitcoin) is directly related to an increase in market risk, measured by SKEW index. This contradicts the traditional approach and aligns to several findings of behavioral finance. More specifically, it shows that investors may be risk seeking actors in anticipation to a belief that volatility will return to normal levels.
KEYWORDS
risk aversion, Bitcoin, SKEW, risk seeking, risk, volatility
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