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Risk-taking for others under accountability

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Author Info

  • Pahlke, Julius
  • Strasser, Sebastian
  • Vieider, Ferdinand M.
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    Abstract

    We let subjects take risky decisions that affect themselves and a passive recipient. Adding a requirement to justify their choices significantly reduces loss aversion. This indicates that such an accountability mechanism may be effective at debiasing loss aversion in agency relations.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165176511003661
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 114 (2012)
    Issue (Month): 1 ()
    Pages: 102-105

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    Handle: RePEc:eee:ecolet:v:114:y:2012:i:1:p:102-105

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: Risk attitude; Prospect theory; Responsibility; Accountability; Loss aversion;

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    References

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    1. Gerlinde Fellner & Matthias Sutter, . "Causes, consequences, and cures of myopic loss aversion - An experimental investigation," Working Papers 2008-01, Faculty of Economics and Statistics, University of Innsbruck.
    2. Booij, Adam S. & van Praag, Bernard M. S. & van de Kuilen, Gijs, 2009. "A Parametric Analysis of Prospect Theory's Functionals for the General Population," IZA Discussion Papers 4117, Institute for the Study of Labor (IZA).
    3. Matthias Sutter, 2008. "Individual behavior and group membership: Comment," Jena Economic Research Papers 2008-075, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
    4. Kristoffer W. Eriksen & Ola Kvaløy, 2010. "Myopic Investment Management," Review of Finance, European Finance Association, vol. 14(3), pages 521-542.
    5. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, 03.
    6. Gary E. Bolton & Axel Ockenfels, 2010. "Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States: Comment," American Economic Review, American Economic Association, vol. 100(1), pages 628-33, March.
    7. Kobberling, Veronika & Wakker, Peter P., 2005. "An index of loss aversion," Journal of Economic Theory, Elsevier, vol. 122(1), pages 119-131, May.
    8. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
    9. Charness, Gary & Jackson, Matthew O., 2009. "The role of responsibility in strategic risk-taking," Journal of Economic Behavior & Organization, Elsevier, vol. 69(3), pages 241-247, March.
    10. Mohammed Abdellaoui, 2000. "Parameter-Free Elicitation of Utility and Probability Weighting Functions," Management Science, INFORMS, vol. 46(11), pages 1497-1512, November.
    11. Sutter, Matthias, 2007. "Are teams prone to myopic loss aversion? An experimental study on individual versus team investment behavior," Economics Letters, Elsevier, vol. 97(2), pages 128-132, November.
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    Citations

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    Cited by:
    1. Natalia Montinari & Michela Rancan, 2013. "Social Preferences under Risk: the Role of Social Distance," Jena Economic Research Papers 2013-050, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
    2. Pollmann, Monique M.H. & Potters, Jan & Trautmann, Stefan T., 2014. "Risk taking by agents: The role of ex-ante and ex-post accountability," Economics Letters, Elsevier, vol. 123(3), pages 387-390.
    3. Tim Friehe & Hannah Schildberg-Hörisch, 2014. "Crime and Self-Control Revisited: Disentangling the Effect of Self-Control on Risk and Social Preferences," CESifo Working Paper Series 4747, CESifo Group Munich.
    4. Mathieu Lefebvre & Ferdinand Vieider, 2013. "Reining in excessive risk-taking by executives: the effect of accountability," Theory and Decision, Springer, vol. 75(4), pages 497-517, October.

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