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Personality and Risk Aversion in Representative Decision Making

Author

Listed:
  • Attila Cseh

    (Valdosta State University)

  • Luke Jones

    (Valdosta State University)

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).

Suggested Citation

  • Attila Cseh & Luke Jones, 2020. "Personality and Risk Aversion in Representative Decision Making," Journal of Economic Insight, Missouri Valley Economic Association, vol. 46(2), pages 47-93.
    • Handle: RePEc:mve:journl:v:46:y:2020:i:2:p:47-93
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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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