Risk Attitudes and Digit Ratio (2D:4D): Evidence From Prospect Theory

28 Pages Posted: 24 Jun 2019

See all articles by Levent Neyse

Levent Neyse

German Institute for Economic Research (DIW Berlin); Kiel Institute for the World Economy

Ferdinand M. Vieider

Ghent University

Patrick Ring

Kiel Institute for the World Economy

Catharina Probst

University of Kiel

Christian Kaernbach

University of Kiel

Thilo van Eimeren

University Hospital of Cologne

Ulrich Schmidt

Kiel Institute for the World Economy

Date Written: June 24, 2019

Abstract

Prenatal androgens have organizational effects on brain and endocrine system development, which may have a partial impact on economic decisions. Numerous studies investigated the relationship between prenatal testosterone and financial risk taking, yet results remain inconclusive. We suspect that this is due to difficulty in capturing risk preferences with expected utility based tasks. Prospect theory, on the other hand, suggests that risk preferences differ between gains, losses and mixed prospects, as well as for different probability levels. This study investigates the relationship between financial risk taking and 2D:4D, a putative marker of prenatal testosterone exposure, in the framework of prospect theory. We conducted our study with 350 participants from Caucasian and Asian ethnicities. We do not observe any significant relationship between 2D:4D and risk taking in neither of these domains and ethnicities.

Keywords: Risk, Prospect Theory, Prenatal Testosterone, Digit Ratio

JEL Classification: C91, D87, D81

Suggested Citation

Neyse, Levent and Vieider, Ferdinand M. and Ring, Patrick and Probst, Catharina and Kaernbach, Christian and van Eimeren, Thilo and Schmidt, Ulrich, Risk Attitudes and Digit Ratio (2D:4D): Evidence From Prospect Theory (June 24, 2019). Available at SSRN: https://ssrn.com/abstract=3409084 or http://dx.doi.org/10.2139/ssrn.3409084

Levent Neyse (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

Ferdinand M. Vieider

Ghent University ( email )

Coupure Links 653
Gent, 9000
Belgium

Patrick Ring

Kiel Institute for the World Economy ( email )

Kiellinie 66
Kiel, Schleswig-Hosltein 24105
Germany

Catharina Probst

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Christian Kaernbach

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

Thilo Van Eimeren

University Hospital of Cologne ( email )

Building 47, 9th floor Kerpener Str.
Herderstrasse 52
Cologne, 50931
Germany

Ulrich Schmidt

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

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