Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245434 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9253
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We show that perceptions of relative rank in the wealth distribution shape individuals' willingness to take risks. Using a representative large-scale survey, we manipulate perceptions of relative standing by randomly varying response categories when asking respondents about their wealth level. Respondents who are induced to perceive their relative position as low display more tolerance towards risk in a subsequent incentivized lottery task. This effect is mainly driven by individuals who more firmly believe that life outcomes are beyond their control. This interaction between risk preferences and underlying beliefs spotlights the benefits of incorporating personality traits into economic analysis.
Subjects: 
relative wealth
risk taking
survey
experiment
locus of control
JEL: 
D31
D63
D81
D91
E21
I31
Document Type: 
Working Paper
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