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Rankings and Risk-Taking in the Finance Industry

Listed author(s):
  • Michael Kirchler

    ()

  • Florian Lindner

    ()

  • Utz Weitzel

    ()

Rankings are omnipresent in the finance industry, yet there is no research how they impact financial professionals' behavior. We run lab-in-the-field experiments with 657 professionals and lab experiments with 432 students to investigate how rank incentives affect investment decisions. We find that both rankings and tournament incentives increase risk- taking among underperforming professionals, but rankings do not affect students. We show that the rank-effect is robust to the experimental frame (investment frame versus abstract frame), to payoff consequences (own return versus family return), to social identity priming (private identity versus professional identity), and to professionals' gender (no gender differences among professionals).

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File URL: http://eeecon.uibk.ac.at/wopec2/repec/inn/wpaper/2016-02.pdf
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Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2016-02.

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Length: 86 pages
Date of creation: Jan 2016
Date of revision: Jul 2017
Handle: RePEc:inn:wpaper:2016-02
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