Risking Other People's Money: Experimental Evidence on the Role of Incentives and Personality Traits

Research output: Contribution to journalArticle

Abstract

Decision makers often face incentives to increase risk‐taking on behalf of others through bonus contracts and relative performance contracts. We conduct an experimental study of risk‐taking on behalf of others using a large heterogeneous sample and find that people respond to such incentives without much apparent concern for stakeholders. Responses are heterogeneous and mitigated by personality traits. The findings suggest that lack of concern for others’ risk exposure hardly requires “financial psychopaths” in order to flourish, but is diminished by social concerns.

Details

Authors
Organisations
External organisations
  • Uppsala University
  • University of Vienna
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics

Keywords

  • Competition, hedging, incentives, risk-taking, social preferences
Original languageEnglish
JournalScandinavian Journal of Economics
Early online date2019 Mar 18
Publication statusE-pub ahead of print - 2019 Mar 18
Publication categoryResearch
Peer-reviewedYes