Experiments on Relationship between Risk Preferences and Returns

In order to investigate the relationship between risk preferences and the returns, three contrastive experiments were designed and carried out in the behavioral finance laboratory developed by ourselves in this paper. By questionnaire survey, investors were classified into three types: risk conservative, risk neutral and risk preference. We studied returns of tested investors in four conditions: continuously rising, continuously falling, intervention and not intervention. From the statistical analysis, we conclude that risk preference investors obtain higher returns than risk neutral investors, while the conservative investors get the lowest returns, when the market is intervened to consecutive rising or consecutive falling. When market rose after the first down, risk preference investors obtain lowest returns. In the balanced market, the preferences of investors have not much contribution to the returns. In whole invest period, the behavior of conservative investors correspond with disposition effect, but not the preference investors.