Effect of experiencing economic crisis on risk perception and risk attitude

This book explores the influence of the experience of economic crises on individual risk perception and risk attitudes in South Korea by applying economic experiments and investigating two relevant cases from the labour and financial markets. Due to the variety of methods, this book confirms the influence of the experience of an economic crisis on an individual’s risk perception and risk attitude. Specifically, the economic experiment confirmed that the experience of an economic crisis, observed within a controlled experimental environment, increases individuals’ risk aversion. In the labour market, the young adult unemployment problem is explored, focusing on young adults’ risk aversion in their job-seeking attitudes by investigating the South Korean 9th class government officers’ recruitment exam. In addition to the cases relating to the economic experiments and the labour market, a financial market case also shows that repeated experience of economic crises creates a „learning effect“ on individual risk perceptions and attitudes. The analysis of the stock market illustrates the fact that South Koreans have not become risk averse but instead have become risk seeking due to the learning effect of their continued experience of economic shocks. Overall, by exploring individual risk propensities, this book addresses the fundamental issue of individual behaviour in markets, namely the effect of economic shocks on individual risk-related behaviours. This book may also offer some implications to policy makers as to what kind of social risk communication is needed and what kind of policies are necessary to support the development of balanced risk perceptions and risk attitudes.