Risking Other People's Money: Experimental Evidence on the Role of Incentives and Personality Traits

Decision‐makers often face incentives to increase risk‐taking on behalf of others (e.g., they are offered bonus contracts and contracts based on relative performance). We conduct an experimental study of risk‐taking on behalf of others using a large heterogeneous sample, and we find that people respond to such incentives without much apparent concern for stakeholders. Responses are heterogeneous and mitigated by personality traits. The findings...