Identity and Choice Under Risk

Abstract

I test a set of predictions that constitute an identity theory of choice under risk in a set of large-scale artefactual field experiments. Male identity increases men's risk taking and beliefs even in pure games of chance with no scope for ability or skills, because identity confirmation increases men's utility. Identity theory could contribute to explain why overconfidence arises even in pure games of chance, the emergence of motivated beliefs, systematic variation in risk preferences over time and across cultural regions, overcompensation in choice, investment in negative NPV projects by risk-averse agents, and overinvestment in delegated choice under risk. Because the motivated beliefs male identity induces have a self-serving scope, departures from expected utility theory are not necessarily suboptimal in this identity theory of choice under risk.

Keywords: Cultural Economics, Motivated Beliefs, Salience, Overconfidence, Risk Attitudes, Heterogeneous Agents, Expected Utility Theory

JEL Classification: C91, C93, D03, D14, G02, J16, Z13