2020

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

Reprint No. 2020:24

Author(s): Ola Andersson, Håkan J. Holm, Jean-Robert Tyran and Erik WengströmYear: 2020 Title: Scandinavian Journal of Economics Volume (No.): 122 (2) Pages: 648–674
Online article (restrictions may apply)
Preliminary version

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.

Reference:
Andersson, Ola, Håkan J. Holm, Jean-Robert Tyran and Erik Wengström (2020), "Risking Other People’s Money: Experimental Evidence on the Role of Incentives and Personality Traits". Scandinavian Journal of Economics 122(2), 648–674.

Ola Andersson

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ola.andersson@ifn.se

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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