Social Status and Risk-Taking in Investment Decisions
Florian Lindner (),
Michael Kirchler (),
Stephanie Rosenkranz () and
Working Papers from Faculty of Economics and Statistics, University of Innsbruck
A pervasive feature in the finance industry is relative performance, which can include extrinsic (money), intrinsic (self-image), and reputational (status) motives. In this paper, we model a portfolio decision with two assets and investigate how reputational motives (i.e., the public announcement of the winners or losers) influence risk-taking in investment deci- sions vis-a-vis intrinsic motives. We test our hypotheses experimentally with 864 students and 330 financial professionals. We find that reputational motives play a minor role among financial professionals, as the risk-taking of underperformers is already increased due to intrinsic motives. Student behavior, however, is mainly driven by reputational motives with risk-taking levels that come close to those of professionals when winners or losers are announced publicly. This indicates that professionals show higher levels of intrinsic (self-image) incentives to outperform others compared to non-professionals (students), but a similar behavior can be sparked among the latter by adding reputational incentives.
Keywords: experimental finance; behavioral economics; investment game; rank incen- tives; social status; reputational motives (search for similar items in EconPapers)
JEL-codes: G02 G11 D03 C91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Social Status and Risk-Taking in Investment Decisions (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2019-07
Access Statistics for this paper
More papers in Working Papers from Faculty of Economics and Statistics, University of Innsbruck Contact information at EDIRC.
Bibliographic data for series maintained by Janette Walde ().