This paper examines how decision making under uncertainty is affected by the presence of a background risk. By background risk, we refer to a risk for which there is no market for trading or hedging. In particular, we construct a class of background risks that we label as risk-taking-neutral (RTN). These background risks have the property that they will not alter the choice decisions made with ...

5

⁎ Corresponding author. E-mail address: [email protected] (S. Mishra). 1090-5138/$ – see front matter © 2014 Elsevier Inc. Al http://dx.doi.org/10.1016/j.evolhumbehav.2013.11.006 Article history: Initial receipt 7 June 2013 Final revision received 15 November 2013

Five studies investigated the hypotheses that the sense of power increases optimism in perceiving risks and leads to more risky behavior. In Studies 1 and 2, individuals with a higher generalized sense of power and those primed with a high-power mind-set were more optimistic in their perceptions of risk. Study 3 primed the concept of power nonconsciously and found that both power and gain/loss ...

We study selection contests in which the strategic variable is the degree of risk rather than the amount of effort. The selection efficiency of such contests is examined. We show that the selection efficiency of a contest may be improved by limiting the competition in two ways; a) by having a small number of contestants, and b) by restricting contestant quality. JEL Classification: C44, D29, D8...

Adolescent risk taking occursmost oftenwhen teens are in the presence of their peers. An extensive body of prior work has attempted to explain this phenomenon with respect to peer pressure, social conformity, and affiliation with deviant peers. Recent experimental work, however, suggests that peer influences on adolescent decision making may be rooted in an even more basic process by which soci...

This paper investigates the effects of bank internationalization on risk-taking. We find that internationalization increases bank risk-taking: the Z-score of US banks that engage in foreign activities is lower than that of their purely domestic peers. The results are consistent with the empirical dominance of the market risk hypothesis, whereby internationalization increases banks’ risk due to ...

Becker, Murphy and Werning (2005) found that individuals about to participate in a status tournament may take fair gambles even though they are risk averse in both wealth and status. Here, this insight is matched with that of Hopkins and Kornienko (2010) that in a tournament or status competition one can consider equality either in terms of initial endowments or in terms of the status or reward...