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 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.

Organisation(s)
Vienna Center for Experimental Economics, Department of Economics
Journal
Scandinavian Journal of Economics
ISSN
0347-0520
DOI
https://doi.org/10.1111/sjoe.12353
Publication date
03-2019
Publication status
E-pub ahead of print
Peer reviewed
Yes
Austrian Fields of Science 2012
502045 Behavioural economics
Keywords
HBE, Cat2
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