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Do Positive Externalities Affect Risk Taking? Experimental Evidence on Gender and Group Membership

Author

Listed:
  • Carina Cavalcanti

    (Department of Accounting, Finance and Economics, Griffith University, Southport and Nathan, QLD, Australia.)

  • Andreas Leibbrandt

    (Department of Economics, Monash University, Clayton, VIC 3800, Australia.)

Abstract

Many positive externalities are created by risk-taking. We investigate whether risk-taking is affected by the presence of positive externalities. In our experiments, we study choices between investments in technologies that differ according to their level of risk and the extent to which they generate positive externalities for others. We find that even large positive externalities have little to no impact on individual risk-taking. We also find that women are generally less willing to take risks than men in the absence and presence of positive externalities and that they generate fewer positive externalities if they increase with risk but more positive externalities if they decrease with risk. Finally, we observe that groups invest more in technologies with larger positive externalities and that this is mainly driven by male group members. These findings provide a comprehensive view on the malleability of risk-taking in the presence of positive externalities.

Suggested Citation

  • Carina Cavalcanti & Andreas Leibbrandt, 2024. "Do Positive Externalities Affect Risk Taking? Experimental Evidence on Gender and Group Membership," Monash Economics Working Papers 2024-05, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2024-05
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    More about this item

    Keywords

    Risk aversion; positive externality; gender;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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