Am I My Peer's Keeper? Social Responsibility in Financial Decision Making

40 Pages Posted: 16 Jun 2015

See all articles by Sascha Füllbrunn

Sascha Füllbrunn

Radboud University Nijmegen - Institute for Management Research

Wolfgang J. Luhan

University of Portsmouth - Faculty of Business - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 15, 2015

Abstract

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.

Keywords: Financial decision making; social responsibility; decision making for others; risk preferences; experiment

JEL Classification: C91, D81, G11

Suggested Citation

Füllbrunn, Sascha and Luhan, Wolfgang J., Am I My Peer's Keeper? Social Responsibility in Financial Decision Making (April 15, 2015). Ruhr Economic Paper No. 551, Available at SSRN: https://ssrn.com/abstract=2618439 or http://dx.doi.org/10.2139/ssrn.2618439

Sascha Füllbrunn

Radboud University Nijmegen - Institute for Management Research ( email )

Heyendaalseweg 141
Nijmegen, 6525 AJ
Netherlands

HOME PAGE: http://www.ru.nl/english/people/fullbrunn-s/

Wolfgang J. Luhan (Contact Author)

University of Portsmouth - Faculty of Business - Department of Economics ( email )

Portsmouth PO4 8JF
United Kingdom

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