approach in general, as reflected by the consistently positive coefficients in the third regression, as shown in Table 3 above. These results directly contradict Prospect theory, which states that when faced with losses, investors tend to take on more risk, and display risk-loving behavior. The results also directly contradict mainstream finance theories such as expected utility theory, which assume a risk-averse investor. Survey of Trinidad and Tobago Investors In addition to the empirical testing, a survey of Trinidad and Tobago investors was conducted, to verify the findings of the empirical tests. The short survey asked multiple choice questions to determine the respondents’ risk attitudes, behaviours and decision-making process. The survey population of 36 consisted mainly of acquaintances in the financial sector (portfolio managers, investment managers, traders, investment analysts) and private investors who invest in Trinidad and Tobago securities, who agreed to participate under the condition of anonymity. The survey was conducted in early 2011. The results of the simple survey are reported as follows: Risk Averse 48% In general, you consider yourself to 1 be Not risk averse 52% Adopt a risk-loving attitude 19% Adopt a risk-averse attitude 23% On average, when faced with 2 losses, you Exit loss-making trades 52% Increase investment in loss-making trades 6% Macroeconomic and financial data 52% Which one has the most influence 3 Overall market sentiment / risk attitude 27% on your investment decisions? Your own risk attitude 21% Macroeconomic / financial data Which ONE is generally more 27% 4 significant in influencing overall market movements? Overall market sentiment / risk attitude 73%
approach in general, as reflected by the consistently positive coefficients in the third regression, as shown in Table 3 above. These results directly contradict Prospect theory, which states that when faced with losses, investors tend to take on more risk, and display risk-loving behavior. The results also directly contradict mainstream finance theories such as expected utility theory, which assume a risk-averse investor. Survey of Trinidad and Tobago Investors In addition to the empirical testing, a survey of Trinidad and Tobago investors was conducted, to verify the findings of the empirical tests. The short survey asked multiple choice questions to determine the respondents’ risk attitudes, behaviours and decision-making process. The survey population of 36 consisted mainly of acquaintances in the financial sector (portfolio managers, investment managers, traders, investment analysts) and private investors who invest in Trinidad and Tobago securities, who agreed to participate under the condition of anonymity. The survey was conducted in early 2011. The results of the simple survey are reported as follows: 1 In general, you consider yourself to be Risk Averse 48% Not risk averse 52% 2 On average, when faced with losses, you Adopt a risk-loving attitude 19% Adopt a risk-averse attitude 23% Exit loss-making trades 52% Increase investment in loss-making trades 6% 3 Which one has the most influence on your investment decisions? Macroeconomic and financial data 52% Overall market sentiment / risk attitude 27% Your own risk attitude 21% 4 Which ONE is generally more significant in influencing overall market movements? Macroeconomic / financial data 27% Overall market sentiment / risk attitude 73%