Identity and Choice Under Risk

71 Pages Posted: 18 Oct 2019

Multiple version iconThere are 3 versions of this paper

Date Written: October 9, 2019


I test a set of predictions that constitute an identity theory of choice under risk using large-scale artefactual field experiments. Men whose identity is primed or threatened invest more in risky opportunities than other men and women. They become overconfident even in pure games of chance with no scope for skill, which is consistent with the motivated-beliefs channel identity theory postulates. The effects are stronger for men who are more likely to commit to male identity – older men and men in the Southern US. I show identity theory can contribute to explain negative-expected-value investment by risk-averse agents (e.g., trading individual stocks) and overinvestment in delegated choice under risk (e.g., managerial overinvestment) using simple financial opportunities. Because behaving in line with their identity increases men's utility, departures from expected utility theory are not necessarily suboptimal in this identity theory of choice under risk.

Keywords: Cultural Finance, Expectations, Motivated Beliefs, Behavioral Finance, Overconfidence, Financial Decision-Making, Risk Attitudes, Heterogeneous Agents, Cultural Economics.

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

Suggested Citation

D'Acunto, Francesco, Identity and Choice Under Risk (October 9, 2019). Available at SSRN: or

Francesco D'Acunto (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

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