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

Author(s)
Ola Andersson, Hakan Holm, Jean-Robert Tyran, Erik Wengström
Abstract

Decision-makers often face incentives to increase risk-taking on behalf of others (e.g., they are offered bonus contracts and contracts based on relative performance). We conduct an experimental study of risk-taking on behalf of others using a large heterogeneous sample, and we 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 a lack of concern for others' risk exposure hardly requires "financial psychopaths" in order to flourish, but it is diminished by social concerns.

Organisation(s)
Vienna Center for Experimental Economics, Department of Economics
External organisation(s)
Lund University, Uppsala University, University of Copenhagen
Journal
Scandinavian Journal of Economics
Volume
122
Pages
648-674
No. of pages
27
ISSN
0347-0520
DOI
https://doi.org/10.1111/sjoe.12353
Publication date
03-2019
Peer reviewed
Yes
Austrian Fields of Science 2012
502045 Behavioural economics
Keywords
ASJC Scopus subject areas
Economics and Econometrics
Portal url
https://ucris.univie.ac.at/portal/en/publications/risking-other-peoples-money-experimental-evidence-on-the-role-of-incentives-and-personality-traits(8ca8008c-63e9-44ab-a13e-70a8b43b8767).html