Personality and Risk Aversion in Representative Decision Making

Attila Cseh and Luke Jones
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Attila Cseh: Valdosta State University
Luke Jones: Valdosta State University

Journal of Economic Insight, 2020, vol. 46, issue 2, 47-93

Abstract: We use a laboratory experiment to analyze how personality characteristics influence risk preference with and without randomly assigned anonymous dependents. In three treatments with dependents, we randomly group participants into pairs - a decision maker and a dependent. The decision maker of each pair faces a choice between a certain payment and a binary lottery of higher expected value. The decision maker role within each pair is either determined by random assignment (RANDOM), or earned based on performance in a pregame (MERIT1, MERIT2). We compare choices in the three treatments to choices of decision makers without a dependent (SELF). We find that individuals with higher scores on agreeableness are more likely to choose the safe option when their decision affects a dependent. We find that higher scores on neuroticism are associated with increased probability of safe choice if the decision maker position is earned (instead of assigned randomly).

JEL-codes: C91 D91 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:mve:journl:v:46:y:2020:i:2:p:47-93

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