We provide empirical evidence that visceral factors affect financial risk taking by showing that exposure to mass shootings alters mutual fund managers’ risk taking decisions. Funds that are exposed to mass shootings subsequently decrease risk relative to their peers. The effect that we document is temporary, lasting approximately one quarter before reverting to normal levels and is strongest among managers with demographics shown to express greater fear from mass shootings. Together with the literature on laboratory studies that show that market downturns induce fear, our findings suggest that fear could exacerbate variation in risk taking, generating the highly volatile countercyclical risk premiums shown to exist in markets.

Bio:

Vicki Bogan’s research interests are in the areas of financial economics, behavioral finance, and applied microeconomics centering on issues involving investment decision making behavior and financial markets. She explores questions relating to investment decision making (corporate and individual) and household portfolio allocation with the goal of shedding light on how to better model observed behavior.

Bogan has published numerous journal articles and book chapters including a book chapter on “Household Investment Decisions,” in Investor Behavior: The Psychology of Financial Planning and Investing. Bogan’s research has received considerable media attention including radio interviews and coverage in Forbes.com, the Wall Street Journal website, NPR’s Marketplace Tech, PsychologyToday.com, and the Harvard Business Review Blog. She also has been featured on the PBS News Hour – Paul Solman’s Making Sense, the Lou Hutt Show on Sirius XM radio, and Knowledge@Wharton on Sirius XM radio.

Bogan currently serves as Co-Editor for Financial Planning Review. She is the founder and director for the Institute for Behavioral and Household Finance. She also worked as a consultant for Hartford Funds Management Group, Inc.

Prof. Bogan teaches finance courses for master’s and undergraduate students in the Dyson School of Cornell University’s SC Johnson College of Business. She has received two outstanding educator awards and the SUNY Chancellor’s Award for Excellence in Teaching.

Bogan holds a Sc.B. degree in Applied Mathematics and Economics from Brown University, an M.B.A. in Finance and Strategic Management from the Wharton School of the University of Pennsylvania, an M.A. in Economics from Brown University, and a Ph.D. in Economics from Brown University. She also has held a visiting fellow appointment at Princeton University.