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Attitudes to economic risk-taking, sensation seeking and values of business students specializing in finance

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  • Sjöberg, Lennart

    ()
    (Center for Risk Research)

  • Engelberg, Elisabeth

    ()
    (Center for Risk Research)

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    Abstract

    Financial decision-making rarely follows models derived from economic theory, which postulate that people are rational economic actors. Psychological alternatives abound. The Tversky-Kahneman heuristics approach is dominating, but it needs to be complemented with emotional and personality factors, since cognitive limitations do not provide exhaustive explanations of the psychology of decision-making. In this paper, attitudes to financial risk-taking and gambling are related to sensation seeking, emotional intelligence, the perceived importance of money (money concern), and over-arching values, in groups of students of financial economics (N=93). Comparative data were collected for a group of non-students. Data on values were also available from a random sample of the population. It was found that the students of finance had a positive attitude to economic risk-taking and gambling behavior, a high level of sensation seeking, a low level of money concern, and gave low priority to altruistic values about peace and the environment. The subgroup of participants planning a career in finance showed an even more pronounced interest in gambling.

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    File URL: http://swoba.hhs.se/hastba/papers/hastba2006_003.pdf
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    Bibliographic Info

    Paper provided by Stockholm School of Economics in its series Working Paper Series in Business Administration with number 2006:3.

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    Length: 30 pages
    Date of creation: 31 Mar 2006
    Date of revision: 15 Oct 2006
    Handle: RePEc:hhb:hastba:2006_003

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    Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, SE 113 83 Stockholm, Sweden
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    Keywords: Decision making; finance; risk attitude; financial advice;

    This paper has been announced in the following NEP Reports:

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    1. Davies, Emma & Lea, Stephen E. G., 1995. "Student attitudes to student debt," Journal of Economic Psychology, Elsevier, vol. 16(4), pages 663-679, December.
    2. Unser, Matthias, 2000. "Lower partial moments as measures of perceived risk: An experimental study," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 253-280, June.
    3. Sjöberg, Lennart, 2001. "Emotional Intelligence Measured in a Highly Competitive Testing Situation," Working Paper Series in Business Administration 2001:13, Stockholm School of Economics, revised 04 Dec 2001.
    4. de Meza, David & Southey, Clive, 1996. "The Borrower's Curse: Optimism, Finance and Entrepreneurship," Economic Journal, Royal Economic Society, vol. 106(435), pages 375-86, March.
    5. Snelbecker, Glenn E. & Roszkowski, Michael J. & Cutler, Neal E., 1990. "Investors' risk tolerance and return aspirations, and financial advisors' interpretations: A conceptual model and exploratory data," Journal of Behavioral Economics, Elsevier, vol. 19(4), pages 377-393.
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