Am I my peer's keeper? Social Responsibility in Financial Decision Making∗

Decision makers often take risky decisions on 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 comprehensive within-subject design, student subjects in the role of money managers have substantial social responsibility by taking investment decisions for a group of six anonymous clients, with own payments either xed or perfectly aligned with their clients payments. We nd that money managers invest signi cantly less for others than for themselves, which is mainly driven by a less risk averse sub-sample. Digging deeper, we nd money managers to rather act in line with what they believe their 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.