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

Andersson, Ola LU ; Holm, Hj LU ; Tyran, Jean-Robert and Wengström, Erik LU (2020) In Scandinavian Journal of Economics 122(2). p.648-674
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.
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author
; ; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Competition, hedging, incentives, risk-taking, social preferences
in
Scandinavian Journal of Economics
volume
122
issue
2
pages
27 pages
publisher
Wiley-Blackwell
external identifiers
  • scopus:85070290927
ISSN
1467-9442
DOI
10.1111/sjoe.12353
language
English
LU publication?
yes
id
03a1fd0e-7214-4863-93f0-ee4d8f449039
date added to LUP
2019-06-18 15:42:04
date last changed
2022-10-25 11:20:49
@article{03a1fd0e-7214-4863-93f0-ee4d8f449039,
  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.}},
  author       = {{Andersson, Ola and Holm, Hj and Tyran, Jean-Robert and Wengström, Erik}},
  issn         = {{1467-9442}},
  keywords     = {{Competition; hedging; incentives; risk-taking; social preferences}},
  language     = {{eng}},
  number       = {{2}},
  pages        = {{648--674}},
  publisher    = {{Wiley-Blackwell}},
  series       = {{Scandinavian Journal of Economics}},
  title        = {{Risking Other People's Money : Experimental Evidence on the Role of Incentives and Personality Traits}},
  url          = {{http://dx.doi.org/10.1111/sjoe.12353}},
  doi          = {{10.1111/sjoe.12353}},
  volume       = {{122}},
  year         = {{2020}},
}