Risk perception fluctuates over time from "summary" of Why Stock Markets Crash by Didier Sornette
The perception of risk is a complex and dynamic phenomenon that is constantly evolving. It is not a static concept that remains constant over time. Instead, it fluctuates in response to a variety of factors, including market conditions, economic trends, and individual experiences. This fluctuation in risk perception is a key driver of market behavior and can have a significant impact on asset prices and market volatility. At times of heightened uncertainty or instability, individuals may perceive the risk of investing in the stock market to be higher, leading them to sell off their holdings and seek safer investments. This can create a self-reinforcing cycle of selling and further drive down prices. Conversely, when market conditions are more favorable and confidence is high, investors may perceive the risk of investing to be lower, leading to increased buying act...
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