Rankings and risk-taking in the finance industry

Arbeitspapier

Rankings are a pervasive feature of the finance industry. Although they have no direct monetary consequences, rankings provide utility for intrinsic (positive self-image) and extrinsic (status) reasons. We recruit a unique subject pool of 204 financial professionals and investigate how anonymous rankings influence risk-taking in investment decisions. We find that rankings increase risk-taking because of financial professionals' desire for positive self-image. This particularly applies to underperformers, who take the highest risks. Incentivizing rankings monetarily does not further increase risk-taking. In a comparative study with 432 students we find that student behavior is not driven by rankings.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Papers in Economics and Statistics ; No. 2016-02

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Field Experiments
• Subject: experimental finance ; behavioral finance ; rank incentives ; rankings ; financial professionals ; investment game ; framed field experiment ; tournament incentives

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kirchler, Michael ; Lindner, Florian ; Weitzel, Utz
• Event: Veröffentlichung
• (who): University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon)
• (where): Innsbruck
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/146119
• Last update: 10.03.2025, 11:43 AM CET