Ruhr Economic Papers
Ruhr Economic Papers #551
Am I my Peer‘s Keeper? Social Responsibility in Financial Decision Making
by Sascha Füllbrunn and Wolfgang J. Luhan
RUB, 04/2015, 38 S./p., 8 Euro, ISBN 978-3-86788-629-1 DOI: 10.4419/86788629download
Decision makers often take risky decisions on the behalf of others rather than for themselves. Competing theoretical models predict both, higher as well as lower levels of risk aversion when taking risk for others, and the experimental evidence is mixed. In our within-subject design, money managers have substantial responsibility by taking investment decisions for themselves and for a group of six clients, when payments are either fixed or perfectly aligned. We find that money managers invest significantly less for others than for themselves (cautious shift) which is mainly driven by a less risk averse sub sample. Digging deeper we find money managers to rather act in line with what they believe the clients would invest for themselves. We derive a responsibility weighting function to show that with a perfectly aligned payment the money manager weights egoistic and social preferences. Finally we bring our results in perspective with the mixed experimental literature.
JEL-Classification: C91, D81, G11
Keywords: Financial decision making; social responsibility; decision making for others; risk preferences; experiment