Mengel, Friederike and Peeters, Ronald (2020) 'Do Markets Encourage Risk Seeking Behavior?' The European Journal of Finance. pp. 1-7. ISSN 1351-847X
|
Text
MengelPeeters-Markets-Risk-final.pdf - Accepted Version Download (1MB) | Preview |
Abstract
Excessive risk-taking in markets can have devastating consequences as the latest financial crises have highlighted. In this paper we ask whether markets as an institution encourage such excessive risk-taking. To establish causality, we isolate the effects of market interaction in a laboratory experiment keeping other possibly confounding factors constant. We find that the opposite is true. Markets decrease participants’ willingness to take risks. This finding can be explained by social comparison utility in the presence of negatively correlated risks.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Markets; Risk-taking; Social comparison; Experiment |
| Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
| SWORD Depositor: | Elements |
| Depositing User: | Elements |
| Date Deposited: | 30 Sep 2020 12:46 |
| Last Modified: | 18 Aug 2022 12:56 |
| URI: | http://repository.essex.ac.uk/id/eprint/28813 |
Actions (login required)
 |
View Item |
Altmetric
Altmetric