Rankings and Risk-Taking in the Finance Industry

Michael Kirchler (), Florian Lindner () and Utz Weitzel

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: Rankings are omnipresent in the finance industry, yet there is no research how they impact financial professionals' behavior. We run lab-in-the-field experiments with 657 professionals and lab experiments with 432 students to investigate how rank incentives affect investment decisions. We find that both rankings and tournament incentives increase risk- taking among underperforming professionals, but rankings do not affect students. We show that the rank-effect is robust to the experimental frame (investment frame versus abstract frame), to payoff consequences (own return versus family return), to social identity priming (private identity versus professional identity), and to professionals' gender (no gender differences among professionals).

Keywords: Experimental finance; behavioral finance; rank incentives; rankings; financial professionals; social identity theory; lab-in-the-field experiment; tournament incentives (search for similar items in EconPapers)
JEL-codes: C93 D03 G02 G11 (search for similar items in EconPapers)
Pages: 86 pages
Date: 2016-01, Revised 2018-03
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (122)

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Related works:
Journal Article: Rankings and Risk‐Taking in the Finance Industry (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2016-02

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