The Relationship between Psychopathy and Financial Risk and Time Preferences
32 Pages Posted: 23 Apr 2019 Last revised: 8 Mar 2020
Date Written: June 30, 2019
We examine the relationship between Psychopathy and its underlying components and financial risk and time preferences in a sample of business majors. We find that overall score on Psychopathy is positively related to the linearity of the cumulative prospective utility function. A breakdown of Psychopathy into its main components shows a more complex relation. For example, one component of Psychopathy, Self-Centered Impulsivity, is statistically significant in models of financial risk preference determinants under Cumulative Prospect Theory. Additionally, we find that two components of Psychopathy - Self-Centered Impulsivity and Stress Immunity - are related to a higher time-preference discount rate under quasi-hyperbolic time preferences.
Keywords: Financial Psychopath, Risk Aversion, Present Bias, Risk Preferences, Time Preferences
JEL Classification: A12, D03, G02, G11
Suggested Citation: Suggested Citation