Rankings and Risk-Taking in the Finance Industry

• Rankings are omnipresent in the finance industry, yet the literature is silent on how they impact financial professionals' behavior. Using lab-in-the-field experiments with 657 professionals and lab experiments with 432 students, we investigate how rank incentives affect investment decisions. We find that both rank and tournament incentives increase risk-taking among underperforming professionals, while only tournament incentives affect students. This rank effect is robust to the experimental frame (investment frame vs. abstract frame), to payoff consequences (own return vs. family return), to social identity priming (private identity vs. professional identity), and to professionals' gender (no gender differences among professionals).

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Nyckelord

path-goal theory

market professionals

portfolio choice

banking

industry

field experiment

incentives

aversion

competition

impact

pay

Business & Economics

armer c

1991

american economic review

v81

p971

Publikations- och innehållstyp

ref (ämneskategori)

art (ämneskategori)