#2213. Reinforcement learning and risk preference in equity linked notes markets

August 2026publication date
Proposal available till 30-05-2025
4 total number of authors per manuscript3510 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Finance;
Economics and Econometrics;
Education
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Abstract:
Using a large sample of equity-linked notes (ELNs) investments, we find evidence showing a negative effect of reinforcement learning on future investments that lasts longer than one investment period. After losses, investors are less likely to repurchase equity-linked notes and spend less on their repurchases. This behavior also results in reinforcement learners underperforming rational agents. We find that more risk-seeking investors are less likely to shun ELNs after undesirable prior returns and that this effect persists for more than one period. The underperformance of reinforcement learners is also reduced with high risk-taking.
Keywords:
Equity-linked notes; Financial decisions; Reinforcement learning; Risk preference

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