Perceived relative wealth and risk taking
We show that perceptions of relative rank in the wealth distribution shape individuals' willingness to take risks. Using a representative large-scale survey, we manipulate perceptions of relative standing by randomly varying response categories when asking respondents about their wealth level....
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| Main Authors: | , |
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| Format: | Book/Monograph Working Paper |
| Language: | English |
| Published: |
Munich, Germany
CESifo, Center for Economic Studies & Ifo Institute
August 2021
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| Series: | CESifo working paper
no. 9253 (2021) |
| In: |
CESifo working papers (no. 9253 (2021))
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| Subjects: | |
| Online Access: | Verlag, kostenfrei: https://www.cesifo.org/DocDL/cesifo1_wp9253.pdf Verlag, kostenfrei: https://www.cesifo.org/en/publikationen/2021/working-paper/perceived-relative-wealth-and-risk-taking 
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| Author Notes: | Dietmar Fehr, Yannick Reichlin |
| Summary: | We show that perceptions of relative rank in the wealth distribution shape individuals' willingness to take risks. Using a representative large-scale survey, we manipulate perceptions of relative standing by randomly varying response categories when asking respondents about their wealth level. Respondents who are induced to perceive their relative position as low display more tolerance towards risk in a subsequent incentivized lottery task. This effect is mainly driven by individuals who more firmly believe that life outcomes are beyond their control. This interaction between risk preferences and underlying beliefs spotlights the benefits of incorporating personality traits into economic analysis. |
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| Physical Description: | Online Resource |