Am I my peer's keeper? Social Responsibility in Financial Decision Making

Sascha Füllbrunn () and Wolfgang Luhan

No 2017-02, Working Papers in Economics & Finance from University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group

Abstract: Risky decisions are often taken on behalf of others rather than for oneself. Competing theoretical models predict both; higher as well as lower levels of risk aversion when taking risk for others. The experimental literature on this topic has found mixed results. In our comprehensive within-subject design, subjects in the role of money managers have substantial social responsibility by taking investment decisions for a group of six anonymous clients, with own payments either fixed or perfectly aligned with their clients payments. We find that money managers invest significantly less for others than for themselves, which is mainly driven by a less risk averse sub-sample. Digging deeper, we find money managers to act in line with what they believe their clients would invest for themselves. We derive a responsibility weighting function to show that with a perfectly aligned payment the money managers' actions are determined by a mix of egoistic and social risk preferences.

Keywords: financial decision making; social responsibility; decision making for others; risk preferences; experiment (search for similar items in EconPapers)
JEL-codes: C91 D03 D81 G11 (search for similar items in EconPapers)
Pages: 32
Date: 2017-03-31
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Am I my Peer's Keeper? Social Responsibility in Financial Decision Making (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pbs:ecofin:2017-02

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