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Risking Other People’s Money: Experimental Evidence on Bonus Schemes, Competition, and Altruism

Ola Andersson, Hakan Holm (), Jean-Robert Tyran () and Erik Wengström ()

No 989, Working Paper Series from Research Institute of Industrial Economics

Abstract: We study risk taking on behalf of others in an experiment on a large random sample. The decision makers in our experiment are facing high-powered incentives to increase the risk on behalf of others through hedged compensation contracts or with tournament incentives. Compared to a baseline condition without such incentives, we find that the decision makers respond strongly to these incentives that result in an increased risk exposure of others. However, we find that the increase in risk taking is mitigated by altruistic preferences and pro-social personality traits.

Keywords: Incentives; Competition; Hedging; Risk taking; Social preferences (search for similar items in EconPapers)
JEL-codes: C72 C90 D30 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth, nep-hrm and nep-upt
Date: 2013-11-19
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0989

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