|
on Neuroeconomics |
|
Issue of 2011‒04‒16
two papers chosen by |
| By: | Jeffrey V. Butler (Einaudi Institute for Economics and Finance (EIEF)); Luigi Guiso (European University Institute and EIEF); Tullio Jappelli (University of Naples Federico II, CSEF and CEPR) |
| Abstract: | Using information on a large sample of retail investors and experimental data we find that risk aversion and risk ambiguity are correlated: individuals who dislike risk also dislike ambiguity. We show that what links these traits is the way people handle decisions. Intuitive thinkers are less averse to risk and less averse to ambiguity than individuals who base their decisions on effortful reasoning. We confirm this finding in a series of experiments. One interpretation of our results is that the high-speed of intuitive thinking puts intuitive thinkers at a comparative advantage in situations involving high risk and ambiguity, making them less averse to both. Consistent with this view we show evidence from the field and from the lab that intuitive thinkers perform better than deliberative thinkers when making decisions in highly ambiguous and risky environments. We also find that attitudes toward risk and ambiguity are related to different individual characteristics and wealth. While the wealthy are less averse to risk, they dislike ambiguity more, a finding that has implications for financial puzzles. |
| Keywords: | Risk Aversion, Risk Ambiguity, Decision Theory, Dual Systems, Intuitive Thinking |
| JEL: | D81 D83 |
| Date: | 2011–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:282&r=neu |
| By: | Laura Guillén (ESMT European School of Management and Technology); Konstantin Korotov (ESMT European School of Management and Technology) |
| Abstract: | In this article, we studied the affective and social normative motivation to lead (MTL) components among a sample of business executives with considerable leadership experience. We built on a solid stream of the leadership literature which suggested that leadership development processes are ingrained in identity processes. The paper presents two studies. In study 1, we examined the importance and psychological attachment individuals place on the leadership role (what is referred to as ‘leader-identity centrality’) and how it relates to their motivation to lead. The process of building a leader-identity has been described as an alignment process through which leadership skills and values become personally shared. In study 2, we seek to understand how self-role alignment, in terms of skills and values, relates to individuals’ MTL. Self-role alignment was conceptualized as the similarity to a previous leader and as self-role value congruence. Results showed that placing importance on the professional leader-identity had a positive impact on the MTL. The impact of the ‘leader-identity centrality’ was more important for people with low self-efficacy perceptions for the social-normative component. ‘Similarity with a previous leader’ related to the MTL and that relationship was found to be fully mediated by leadership self-efficacy perceptions. Values were found to have significant effects on the MTL. While individual and role values had a linear (additive) relationship in predicting SNMTL, they showed a more complex relationship with respect to the AffMTL component. Findings are discussed with reference to the MTL literature and practical implications are proposed. |
| Keywords: | motivation to lead, identity, self-role alignment, value congruence |
| Date: | 2011–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:esm:wpaper:esmt-11-04&r=neu |