Deciding for Oneself or Others: A structural approach on risky decision making for others

Keywords

No Thumbnail Available

Issue Date

2018-08-15

Language

en

Document type

Journal Title

Journal ISSN

Volume Title

Publisher

Title

ISSN

Volume

Issue

Startpage

Endpage

DOI

Abstract

This paper examines whether an individual’s risk-taking changes when s/he is taking a decision for someone else. Using an online experiment with a mixed subject pool of bankers, managers and students, with gain loss and mixed prospects, we constructed a structural model based on prospect theory. We find that making a decision on behalf of someone else leaves the utility curvatures unaffected. But does result in an accentuation of the four-fold pattern of risk preferences. In addition, we also conclude that decision making for others leads to a reduction of loss aversion. Furthermore, we find an increase in probabilistic sensitivity for both the gain as loss domain, the above results hold even when controlled for order.

Description

Citation

Supervisor

Faculty

Faculteit der Managementwetenschappen

Specialisation