Deciding for Oneself or Others: A structural approach on risky decision making for others
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2018-08-15
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en
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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.
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Faculteit der Managementwetenschappen