Interactive: The Balloon Test measures your risk tolerance
For those who have been early readers of the blog, you might remember the earlier Balloon test which we featured a few years back. We lamented the day it disappeared. That lamentation was replaced with exultation when I recently came across a new version of it. Not perfect. Not visually appealing. But it does the job of showing our tolerance for risk.
Here's the interactive:
Here's how the game is played:
- You gain money every time you press PUMP which fills up the balloon.
- At random times, the balloon will burst after you pump and you will lose all the points you might have accumulated for that specific trial.
- At any point during the trial you can COLLECT $$$ which fills up your piggy bank (the one in the middle)
- The goal: Have the most money in your piggy back after 10 TRIALS. (You can go to 30 but I find it gets monotonous beyond 10)
- Make it competitive and share your score with your classmates
- Pre-game question: How do you feel about risk when it comes to investing? How would you feel if the stock you bought dropped by 20%?
- How many points did you earn after 10 trials (rounds)?
- What was your strategy to play the game? Did your first or second trial impact how you played the game?
- Compare the emotional reaction you had having the balloon burst to COLLECTING $. Which was stronger?
- If like most people, losses we experience about twice as strongly as we enjoy gains. That phenomenon is known as loss aversion.
Here are more interactives that have been featured recently on the blog.