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EXPLORING THE INTERPLAY BETWEEN SENSATION SEEKING, BIOLOGICAL INDICATORS, AND FINANCIAL RISK-TAKING BEHAVIOR: A DIGITAL RESEARCH PERSPECTIVE
Abstract
Purpose- This study investigates the complex relationship between sensation-seeking, biological indicators, and financial risk-taking behavior. Utilizing a digital research approach, the study examines how individual differences in sensation seeking, measured by the Zuckerman Sensation Seeking Scale (SSS-V), correlate with financial risk tolerance. Methodology- Each unit of analysis is categorized as a risk-averse, risk-neutral, and risk-lover according to both biological and probabilistic game attitudes. Biological indicators, specifically the 2D:4D ratio, are used to categorize individuals as risk-averse, risk-neutral, or risk-lover. The research employs a probabilistic lottery game to further classify participants' risk preferences. Findings- Findings reveal that while sensation seeking is generally associated with higher financial risk-taking, the interplay between biological indicators and risk behavior is nuanced. Probabilistic game categorization results indicate that sensational-seeking score not only for total but also for subdimension is not statistically significant. Conclusion- Notably, individuals with higher sensation-seeking scores do not always exhibit higher financial risk tolerance. Biological indicators and probabilistic game classification will indicate the different mean values of the sensational-seeking score. Biological indicators differentiate the mean difference of individuals’ sensational-seeking scores. The study contributes to the understanding of how psychological traits and biological factors jointly influence financial decision-making. Keywords: Financial risk-taking, 2D:4D ratio, digital research, sensation seeking, risk tolerance JEL Codes: D81, D84, D91
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The balloon analogue risk task (BART) is widely used to assess risk-taking tendencies on behavioral tests. However, biases or unstable results are sometimes reported, and there are concerns about whether the BART can predict risk behavior in the real world. To address this problem, the present study developed a virtual reality (VR) BART to enhance the reality of the task and narrow the gap between performance on the BART and risk behavior in the real world. We evaluated the usability of our VR BART through assessments of the relationships between BART scores and psychological metrics and additionally implemented an emergency decision-making VR driving task to investigate further whether the VR BART can predict risk-related decision-making in emergency situations. Notably, we found that the BART score significantly correlated with both sensation-seeking and risky driving behavior. Additionally, when we split participants into groups with high and low BART scores and compared their psychological metrics, we found that the high-score BART group included more male participants and exhibited higher sensation-seeking and more risky decision-making in an emergency situation. Overall, our study shows the potential of our new VR BART paradigm to predict risky decision-making in the real world.
The purpose of this study was to explore the mediating effect of difficulties in emotion regulation on the relationship between sensation seeking and driving behavior based on the dual‐process model of aberrant driving behavior. A sample of 299 drivers in China completed the Difficulties in Emotion Regulation Scale, the Driver Behavior Questionnaire, and the Sensation Seeking Scale V (SSS). The relationships among sensation seeking, difficulties in emotion regulation, and driving behavior were investigated using pathway analysis. The results showed that (1) disinhibition and boredom susceptibility are positively and significantly related to difficulties in emotion regulation and risky driving behaviors; (2) difficulties in emotion regulation are positively and significantly associated with risky driving behaviors; (3) difficulties in emotion regulation mediate the effect of sensation seeking on driving behaviors, supporting the dual‐process model of driving behavior; and (4) professional drivers score higher in terms of difficulties in emotion regulation and risky driving behaviors than nonprofessional drivers. The findings of this study could provide valuable insights into the selection of suitable drivers and the development of certain programs that benefit road safety.
Prenatal androgens have organizational effects on brain and endocrine system development, which may have a partial impact on economic decisions. Numerous studies have investigated the relationship between prenatal testosterone and financial risk taking, yet results remain inconclusive. We suspect that this is due to difficulty in capturing risk preferences with expected utility based tasks. Prospect theory, on the other hand, suggests that risk preferences differ between gains, losses and mixed prospects, as well as for different probability levels. This study investigates the relationship between financial risk taking and 2D:4D, a putative marker of prenatal testosterone exposure, in the framework of prospect theory. We conducted our study with 350 participants of Caucasian and Asian ethnicities. We do not observe any significant relationship between 2D:4D and risk taking in either of these domains and ethnicities.
Purpose
The purpose of this paper is to investigate the influence of six core behavioural factors on financial risk tolerance (FRT). The study also analyses the role of religiosity in the relationship between behavioural factors and FRT.
Design/methodology/approach
Empirical data were collected using a survey questionnaire. A total of 1,679 questionnaires were distributed to six public universities in the Klang Valley. However, only 1,204 questionnaires were completed and used for analysis. This study employs structural equation modelling to validate and assess proposed research model.
Findings
The results of the analysis demonstrated some new findings. The findings indicate that propensity for regret, propensity for trust, happiness in life, propensity to attribute success to luck and propensity for overconfidence have a significant influence on FRT while propensity for social interaction does not. The results also provide support for the moderating effects of religiosity in the proposed research model.
Originality/value
The findings highlight the important role of behavioural determinants to assess individuals’ FRT. Understanding FRT is a complex process that goes beyond the exclusive use of behavioural factors. Thus, more research is clearly needed to resolve which additional factors can be used by financial advisors to increase the explained variance in FRT differences.
We study how the ratio between the length of the second and fourth digit (2D:4D) correlates with choices in social and risk preferences elicitation tasks by building a large dataset from five experimental projects with more than 800 subjects. Our results confirm the recent literature that downplays the link between 2D:4D and many domains of economic interest, such as social and risk preferences. As for the former, we find that social preferences are significantly lower when 2D:4D is above the median value only for subjects with low cognitive ability. As for the latter, we find that a high 2D:4D is not correlated with the frequency of subjects' risky choices.
In financial investment decisions to be made by individual investors, it is highly important that they should be aware of the possibility of facing with psychological biases by knowing their own personality traits and should consider their own financial risk tolerances. In this study, the relation between personal traits, psychological biases and financial risk tolerance of inverstors were tested through a questionnaire. Sample of the study were selected among individual inverstor who live in İstanbul and operate in financial markets. The hypotheses made within the scope of the study were tested by chi-square analysis and logistic regression analysis. As a result of the hypotheses testing, it was concluded that there was a significant relation between the personality traits of investors and the psychological biases they faced and that the personality traits of investors affected their financial risk tolerances.
Many important decisions involve financial risk, and substantial evidence suggests that women tend to be more risk averse
than men. We explore a potential biological basis of risk-taking variation within and between the sexes by studying how the
ratio between the length of the second and fourth fingers (2D:4D) predicts risk-taking. A smaller 2D:4D ratio has been linked
to higher exposure to prenatal testosterone relative to estradiol, with men having lower ratios than women. In financially
motivated decision-making tasks, we find that men and women with smaller 2D:4D ratios chose significantly riskier options.
We further find that the ratio partially explains the variation in risk-taking between the sexes. Moreover, for men and women
at the extremes of the digit-ratio distribution the difference in risk-taking disappears. Thus, the 2D:4D ratio partially
explains variation in financial risk-taking behavior within and between sexes and offers evidence of a biological basis for
risk-taking behavior.
KeywordsRisk–Sex differences–Experiments–Testosterone
Prenatal testosterone has important effects on brain organization and future behavior. The second-to-fourth digit length ratio (2D:4D), a proxy of prenatal testosterone exposure, has been linked to a wide variety of sexually differentiated dispositions and behaviors. We examine the relationship between digit length ratios (2D:4D and rel2, the length of the second finger relative to the sum of the lengths of all four fingers) and risk-taking behaviors across five domains: financial, social, recreational, ethical, and health. In a sub-sample of male Caucasians (ethnically homogeneous), lower rel2 was predictive of greater financial, social, and recreational risk-taking, whereas lower 2D:4D was predictive of greater risk-taking in two domains (social and recreational). In the full male sub-sample (ethnically heterogeneous), the only significant correlation was a negative association between 2D:4D and financial risk. A composite measure of risk-taking across all five domains revealed that both rel2 and 2D:4D were negatively correlated with overall risk-taking in both male sub-samples. No significant correlations were found in the female sub-samples. Finally, men were more risk-seeking than women across all five contexts.
Recent literature emphasizes the role that testosterone, as well as markers indicating early exposure to T and its organizing effect on the brain (such as the ratio of second to fourth finger, [Formula: see text]), have on performance in financial markets. These results may suggest that the main effect of T, either circulating or in fetal exposure, on economic behavior occurs through the increased willingness to take risks. However, these findings indicate that traders with a low digit ratio are not only more profitable, but more able to survive in the long run, thus the effect might consist of more than just lower risk aversion. In addition, recent literature suggests a positive correlation between abstract reasoning ability and higher willingness to take risks. To test the two hypotheses of testosterone on performance in financial activities (effect on risk attitude versus a complex effect involving risk attitude and reasoning ability), we gather data on the three variables in a sample of 188 ethnically homogeneous college students (Caucasians). We measure a [Formula: see text] digit ratio, abstract reasoning ability with the Raven Progressive Matrices task, and risk attitude with choice among lotteries. Low digit ratio in men is associated with higher risk taking and higher scores in abstract reasoning ability when a combined measure of risk aversion over different tasks is used. This explains both the higher performance and higher survival rate observed in traders, as well as the observed correlation between abstract reasoning ability and risk taking. We also analyze how much of the total effect of digit ratio on risk attitude is direct, and how much is mediated. Mediation analysis shows that a substantial part of the effect of T on attitude to risk is mediated by abstract reasoning ability.
Our aims are, first, to describe the sex difference in the length ratio of the second and fourth digits (2D:4D), which likely reflects prenatal testosterone levels in humans. Second, to infer the loss of reliability observed in 2D:4D based on self-measured finger lengths.
We used random-effects meta-analysis of 2D:4D based on expert-measured finger lengths (116 samples with 13,260 females and 11,789 males).
We find a moderate sex difference (with lower 2D:4D for males), which shows substantial heterogeneity (which is unrelated to age). The sex difference is moderated by the type of finger length measurement and by hand. Measurement involving the distortion of soft tissue leads to a significantly larger sex difference than finger length measurement avoiding this. The sex difference in 2D:4D is larger in the right hand than in the left. The reliability of self-measured 2D:4D in the BBC internet study, by far the largest study on 2D:4D, is estimated to be 46% of that of expert-measured 2D:4D.
Right-hand 2D:4D might be a better indicator of prenatal androgenisation than left-hand 2D:4D. The view that 2D:4D has allometric properties (Kratochvil L, Flegr J. 2009. Differences in 2nd to 4th digit length ratio in humans reflect shifts along the common allometric line. Biol Lett 5:643-646.) is not supported. Bone lengths contribute to the sex difference in 2D:4D. In addition, there might be a sex difference in fingers' soft tissue, which should be investigated. Because of measurement unreliability, correlations between 2D:4D and variables of interest are about one-third smaller in the BBC internet study than in studies in which 2D:4D is based on expert-measured finger lengths.
The first part of this article describes a study of the relationships between personality and risk-taking in six areas: smoking, drinking, drugs, sex, driving, and gambling. The participants, 260 college students, were given self-report measures of risky behaviors in each of the six areas and the Zuckerman-Kuhlman five-factor personality questionnaire. Generalized risk-taking (across all six areas) was related to scales for impulsive sensation seeking, aggression, and sociability, but not to scales for neuroticism or activity. Gender differences on risk-taking were mediated by differences on impulsive sensation seeking. The second part discusses biological traits associated with both risk-taking and personality, particularly sensation seeking, such as the D4 dopamine receptor gene. the enzyme monoamine oxidase, and augmenting or reducing of the cortical evoked potential. Comparative studies show relationships between biological markers shared with other species and correlated behaviors similar to sensation seeking in humans. A biosocial model of the traits underlying risk-taking is presented.
The present study investigated the potential contribution of sensation seeking, impulsiveness, and boredom proneness to driving anger in the prediction of aggressive and risky driving. Two hundred and twenty-four college student participants completed measures of trait driving anger, aggressive and risky driving, driving anger expression, sensation seeking, impulsiveness, and boredom proneness. Findings provided additional support for the utility of the Driving Anger Scale (DAS; Deffenbacher, J.L., Oetting, E.R., Lynch, R.S., Development of a driving anger scale, Psychological Reports, 74, 1994, 83-91.) in predicting unsafe driving. In addition, hierarchical multiple regression analyses demonstrated that sensation seeking, impulsiveness, and boredom proneness provided incremental improvements beyond the DAS in the prediction of crash-related conditions, aggressive driving, risky driving, and driving anger expression. Results support the use of multiple predictors in understanding unsafe driving behavior.
Purpose
This paper seeks to investigate whether women exhibit greater risk-aversion behavior than men in investments by estimating the influence of gender on portfolio volatility.
Design/methodology/approach
Data on the volatility observed in the portfolio in the last six months, last twelve months and since the individual became a client at one of the largest financial institutions in Brazil – and in Latin America – that operates in the capital markets are used. In addition to the gender explanatory variable, socioeconomic variables such as age, marital status, suitability, residence in capitals and declared assets are controlled, and multiple linear regression models are controlled.
Findings
The results show that gender is statistically significant in all models estimated to explain the volatility of investment portfolios, saying that women are more risk averse than men.
Originality/value
These findings are useful for the scientific literature that investigates behavioral finance by bringing empirical evidence for Brazil.
Adolescence is a peak period for risk‐taking, but research has largely overlooked positive manifestations of adolescent risk‐taking due to ambiguity regarding operationalization and measurement of positive risk‐taking. We address this limitation using a mixed‐methods approach. We elicited free responses from contemporary college students (N = 74, Mage = 20.1 years) describing a time they took a risk. Qualitative analysis informed the construction of a self‐report positive risk‐taking scale, which was administered to a population‐based sample of adolescents (N = 1,249, Mage = 16 years) for quantitative validation and examination of associations with normative and impulsive personality. Sensation seeking predicted negative and positive risk‐taking, whereas extraversion and openness were predominantly related to positive risk‐taking. Results provide promising evidence for a valid measure of adolescents' engagement in positive risks.
Financial risk tolerance is an important personal characteristic that is widely used by financial professionals to guide the development and presentation of client-centered recommendations. As more baby boomers enter retirement, research on how these individuals perceive their willingness to take financial risks has gained importance, particularly as the focus of investment portfolios changes from capital accumulation to capital preservation in retirement. This study examined the role of sensation seeking and locus of control on financial risk tolerance for a pre-retiree baby boomer sample using the 2014 wave of the National Longitudinal Survey of Youth 1979. Findings from three ordinary least square (OLS) regression models showed that baby boomers who were not sensation seekers, and those who displayed an external locus of control orientation were more likely to exhibit a low tolerance for financial risk. Furthermore, those who engaged in sensation-seeking behavior were more likely to have an internal locus of control orientation and a high tolerance for risk.
The average investor who lives in a state with relatively higher alcohol consumption is more likely to buy and sell lottery-type stocks and to trade more often. Both of these activities entail sensation seeking; correspondingly, we find that speculative investment behavior is correlated with alcohol consumption only in states with lotteries and where a local tendency for sensation seeking behavior has not been diluted by an influx of migrants from other states where alcohol consumption is low. Most importantly, our results suggest that alcohol consumption does not per se drive a preference for investment gambles, but rather portrays the type of local culture in which the speculative investing occurs.
We show that motivated by sensation seeking, hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns, resulting in lower Sharpe ratios, information ratios, and alphas. Moreover, sensation‐seeking managers trade more frequently, actively, and unconventionally, and prefer lottery‐like stocks. We show further that some investors are themselves susceptible to sensation seeking and that sensation‐seeking investors fuel the demand for sensation‐seeking managers. While investors perceive sensation seekers to be less competent, they do not fully appreciate the superior investment skills of sensation‐avoiding fund managers.
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A number of papers have recently explored the relation between personality measures and risk aversion. However, research on risk aversion using the Myers-Briggs Type Indicator (MBTI) personality measure is scarce. The relation of various dimensions of the MBTI with risk aversion is at the moment under-researched compared to its use in the business and counseling world. To explore this relation, we carried out an incentivized experiment using 333 business school students. We find that according to our theoretical hypotheses, respondents scoring higher on Introversion, Sensing, Feeling and Judging are more risk averse, with the effect for Sensing and Feeling being non-linear. We also find women, Master students, respondents coming from a quantitative background and respondents that do not follow the stock markets to be more risk averse. The relations highlighted between the MBTI dimensions and risk aversion correspond broadly to the findings already evidenced using the Big 5 in studies using questionnaires or lotteries. This emphasizes the significant overlap between the two personality evaluation methods in relation to risk aversion. Our findings also underscore that the MBTI might be a useful tool in studies on risk aversion using lotteries, given the significant link of its dimensions with the elicited risk aversion in our study.
https://authors.elsevier.com/a/1W05q7tbfGb6aN
An Internet study was conducted to test perceived risk and actual risk preferences in bear and bull markets,
controlling for sensation seeking. Small private investors (N=292), evaluated the riskiness of 4 portfolios that
differed in expected return and variance and then chose one of the 4 portfolio. One group of investors (N=143)
made choices in bear markets, and the other (N=149) made choices in bull markets. Risk perception was
measured in 0–100-response scale, and individual differences in sensation seeking were measured using the
Zuckerman, Eysenck, and Eysenck (1978) scale. Sensation seeking negatively correlated with perceived risk in
bull markets but not in bear markets. The perceived riskiness of portfolios was similar in both market conditions,
but those who made decisions in bull markets chose more risky portfolios. Sensation seeking positively correlated with preference for risky portfolios in both market conditions.
Purpose
– The purpose of this paper is to determine relationships between financial risk tolerance and the personality traits of sensation-seeking, locus of control, ambiguity tolerance, and financial dishonesty.
Design/methodology/approach
– A pretested questionnaire was used to gather information from 255 respondents. With risk tolerance as a criterion variable and the four personality traits as predictor variables, a regression procedure was performed to determine which variables contributed to the variability of the criterion variable and the extent of such contribution. An analysis was also done to find out whether gender, age, GPA, and academic standing had an influence on each personality trait’s contribution to risk tolerance.
Findings
– Risk tolerance is directly related to sensation-seeking and the link is so strong that it is not mitigated by the effects of gender, age, GPA, and college academic standings. As for locus of control, the more one believes one has control over one’s outcome, the higher risk one can tolerate. Surprisingly, there is no relationship between risk and ambiguity tolerances. Dishonesty also does not affect risk tolerance behavior. However, the relationship is found to exist among younger individuals and those with lower GPA, possibly due to not having reached an adequate level of matured or critical reasoning yet.
Originality/value
– The relationship between risk tolerance and sensation-seeking is an established fact but whether the relationship still holds across several demographic groups is part of this study’s focus. Although much has been done on risk tolerance, very little has been done on its relationship to locus of control, ambiguity tolerance, and financial dishonesty.
Although impulsivity, sensation-seeking, and part-time employment have each been linked to risky behaviors in adolescents, their inter-relationships are less well-understood. We examined data from adolescents to assess the following predictions: (1) sensation-seeking would relate closely to substance use and gambling; (2) impulsivity would relate closely to alcohol, drug, and gambling problems; and (3) these relationships would be particularly strong among those holding part-time jobs.
High-school students (N = 3,106) were surveyed to provide data on impulsivity, sensation-seeking, and part-time job status. Bivariate and logistic regression analyses were conducted to examine relationships with gambling, substance use (i.e., alcohol, cigarettes, and marijuana) and related problems.
Both impulsivity and sensation-seeking related significantly to substance use and impulsivity to gambling. Impulsivity had stronger associations with drug and gambling problems than sensation-seeking did. Students with paid part-time jobs were more likely to drink alcohol, binge drink, and use marijuana. Sensation-seeking had a particularly strong relationship to heavy cigarette smoking among students with part-time jobs. Conversely, there was little relationship between part-time job status and smoking among low sensation-seekers.
These findings further support the relevance of sensation-seeking, impulsivity, and part-time job status to risky behaviors among adolescents. Sensation-seeking and impulsivity had unique relationships to risky behaviors, in accordance with theory and prior evidence. Impulsive adolescents may be in particular need for interventions to reduce drug use and gambling. Although part-time jobs can be beneficial, parents and caregivers should be mindful of potential negative ramifications of paid work outside the home.
Individuals exhibit substantial heterogeneity in financial risk aversion. Recent work on twins demonstrated that some variation is influenced by individual heritable differences. Despite this, there has been no study investigating possible genetic loci associated with financial risk taking in healthy individuals. Here, we examined whether there is an association between financial risk preferences, elicited experimentally in a game with real monetary payoffs, and the presence of the 7-repeat allele (7R+) in the dopamine receptor D4 gene as well as the presence of the A1 allele (A1+) in the dopamine receptor D2 gene in 94 young men. Although we found no association between the A1 allele and risk preferences, we did find that 7R+ men are significantly more risk loving than 7R− men. This polymorphism accounts for roughly 20% of the heritable variation in financial risk taking. We suggest that selection for the 7R allele may be for a behavioral phenotype associated with risk taking. This is consistent with previous evolutionary explanations suggesting that selection for this allele was for behaviors associated with migration and male competition, both of which entail an element of risk.
Recent evidence suggests that impulsivity and sensation seeking are not stable risk factors for substance use among adolescents and early adults but rather that they undergo significant developmental maturation and change. Further, developmental trends of both personality facets may vary across individuals. In the current investigation, we used longitudinal data from ages 15 to 26 on 5,632 individuals drawn from the offspring generation of the National Longitudinal Survey of Youth to examine whether interindividual differences in intraindividual change in impulsivity and sensation seeking predicted the escalation of alcohol, marijuana, and cigarette use in adolescence and early adulthood. Latent growth curve models revealed significant individual differences in rates of change in both personality and substance use. Age-related changes in personality were positively associated with individual differences in substance-use change. Individuals who declined more slowly in impulsivity increased in alcohol, marijuana, and cigarette more rapidly, whereas individuals who declined more slowly in sensation seeking increased more rapidly in alcohol use only. Although risk for substance use across the population may peak during adolescence and early adulthood, this risk may be highest among those who decline more gradually in impulsivity.
In an experiment using two-bidder first-price sealed bid auctions with symmetric independent private values, we scan also the right hand of each subject. We study how the ratio of the length of the index and ring fingers (2D:4D) of the right hand, a measure of prenatal hormone exposure, is correlated with bidding behavior and total prots. 2D:4D has been reported to predict competitiveness in sports competition (Manning and Taylor, 2001, and Honekopp, Manning and Muller, 2006), risk aversion in an investment task (Dreber and Homan, 2007, Garbarino et al., 2010), and the average profitability of high-frequency traders in financial markets (Coates, Gurnell and Rustichini, 2009). We do not find any significant correlation between 2D:4D on either bidding or profits. However, our study raises an issue of ethnic differences with respect to 2D:4D.
The present study investigated the degree to which the previously established relationship between sensation seeking and risk taking associated with gambling could be extended to everyday financial matters (e.g., personal banking activities). The subjects, classified into high and low sensation seekers, were asked to make a series of everyday financial decisions that varied in their degrees of risk. Overall, the results indicate high sensation seekers displayed greater risk-taking tendencies in everyday financial matters than low sensation seekers. This difference in everyday financial risk taking between high and low sensation seekers was also found within each gender group. Implications and suggestions for future research involving sensation seeking in other personal and professional financial decision-making areas are also presented.
The relationships between sensation seeking and gender role orientation were examined among 325 Turkish university students.
The Sensation Seeking Scale Form V (SSS-V; Zuckerman, Behavioral expressions and biosocial bases of sensation seeking. Cambridge University Press, New York, 1994) and the Bem Sex Role Inventory (BSRI; Bem, Journal of Counseling and Clinical Psychology, 42:155–162, 1974) were used for data collection. The dimensions of the SSS-V were Thrill and Adventure Seeking, Disinhibition,
Experience Seeking, and Boredom Susceptibility. The ANOVA and MANOVA revealed main effects for gender and gender role orientation.
As predicted, men reported higher levels of overall sensation seeking and Disinhibition than women did. Androgynous and masculine
groups reported higher levels of overall sensation seeking, Disinhibition and Experience Seeking than the feminine group did.
The effect of gender role orientation on Thrill and Adventure Seeking and Boredom Susceptibility was insignificant.
College students are at especially high risk for serious financial problems due to easy availability of credit cards, rising
tuition, and a declining economy. Arnett (Am Psychol 55:469–480, 2000) proposed 18–25year olds may be considered emerging adults and are characterized by less stable financial situations than
those who perceive themselves to be adults. A survey was given to 450 students at two Mississippi universities. The results
showed student financial behaviors were related to age, gender, public assistance, adult status, sensation-seeking, and potential
for problem gambling. This study is unique in that it investigated the relationship of emerging adult/adult status and other
individual and socio-demographic variables to financial behaviors among college students, a conceptualization that has not
been explored in the past.
KeywordsAdult status-College students-Financial behaviors
Risky behavior in humans is typically considered irrational, reckless, and maladaptive. Risk-sensitivity theory, however, suggests that risky behavior may be adaptive in some circumstances: decision-makers should prefer high-risk options in situations of high need, when lower risk options are unlikely to meet those needs. This pattern of decision-making has been well established in the non-human animal literature, but little research has been conducted on humans. We demonstrate in a two-part experimental study that young men and women (n = 115) behave as predicted by risk-sensitivity theory, shifting from risk-aversion to risk-proneness in situations of high need. This shift occurred whether decisions were made from description or from experience, and was observed controlling for sex and individual differences in general risk-taking propensity. This study is the first ecologically-relevant demonstration of risk-sensitive decision-making in humans.
The current study examined the potential mediating role of sensation seeking in the well-established negative relationship between age and financial risk-taking. A total of 299 participants, aged 17–90 years, allocated hypothetical money into mutual funds that varied in risk and completed a sensation seeking measure. Hierarchical multiple regressions revealed that the amount of variability age accounted for in risk-taking (4.1%; β = −.22) was significantly reduced when sensation seeking was controlled for (0.8%; β = −.12). A Sobel test revealed that sensation seeking fully mediated the aforementioned relationship. Results suggest sensation seeking’s role as a mediator in more physiologically arousing risk-taking contexts (e.g., surfing). Discussion recommends investigating potential biologically and cognitively-rooted mediators and moderators of the age and risk-taking relationship.
In a national youth sample, the propensity to use substances was more strongly related to motor vehicle crashes than use of any specific substance studied (cigarette, alcohol, marijuana). Substance use propensity was associated with sensation seeking, suggesting that increased crash risk for these youth is likely a result of general risk-taking tendencies.
Por necesidades de investigación habíamos traducido al español
y utilizado la Sensation Seeking Scale-Eorm: V (SSS) desarrollada
por Zuckerman y cols., (1978). El presente trabajo muestra fiabilidades
alfa y test-reteseasí corno datos sobre validez estructural (construct
validity) de la versión española de la SSS. Utilizando diversas
muestras de estudiantes catalanes, la citada escala aparece con acepo
table fiabilidad y validez
Compared the factor structure of the Sensation-Seeking Scale (SSS) in English and American samples, and constructed a new form of the SSS, applicable to both groups. The English Ss consisted of 254 males and 639 females from the Maudsley Twin Register, ages 15–70 yrs. The American sample included 97 male and female undergraduates. Three of the 4 factors showed good cross-national and cross-sex reliability (i.e., significant and reasonably high resemblance between the 4 national and sex symbols). English and American males did not differ on the total SSS score, but American females scored higher than English females. Males in both countries scored higher than females on the total SSS score and on the Thrill and Adventure-Seeking and Disinhibition subscales. Significant age declines occurred for both sexes, particularly on Thrill and Adventure Seeking and Disinhibition. (24 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
We challenge the prevailing notion that risk taking is a stable trait, such that individuals show consistent risk-taking/aversive behavior across domains. We subscribe to an alternative approach that appreciates the domain-specific nature of risk taking. More important, we recognize heterogeneity of risk profiles among experimental samples and introduce a new methodology that takes this heterogeneity into account. Rather than using a convenient subject pool (i.e., university students), as is typically done, we specifically targeted relevant subsamples to provide further validation of the domain-specific nature of risk taking. Our research shows that individuals who exhibit high levels of risk-taking behavior in one content area (e.g., bungee jumpers taking recreational risks) can exhibit moderate levels in other risky domains (e.g., financial). Furthermore, our results indicate that risk taking among targeted subsamples can be explained within a cost-benefit framework and is largely mediated by the perceived benefit of the activity, and to a lesser extent by the perceived risk.
The number of students accumulating credit card debt--and the amount of debt itself--on college campuses is increasing. If high-risk credit and health behavior are associated, health behavior interventions might apply to high-risk credit behavior.
The authors' purpose was to examine these possible associations.
They used a retrospective design with existing data from a sample of 45,213 US college students and several ordinal regression models, which corresponded with high priority college health issues.
Students with high-risk credit behavior were more likely to have driven after drinking, used amphetamines in the previous 30 days, felt functionally impaired by depression in the previous 12 months, had a higher body mass index (BMI), or had a lower grade-point average (GPA). They were less likely to have participated in vigorous physical activity, used condoms for oral or vaginal sex in the prior 30 days, or used marijuana. The findings support the notion that high-risk health and credit behaviors are associated.
Further research could clarify the nature of this relation.
This study analyzes the role that two psychological attributes%u2014sensation seeking and overconfidence%u2014play in the tendency of investors to trade stocks. Equity trading data are combined with data from an investor%u2019s tax filings, driving record, and psychological profile. We use the data to construct measures of overconfidence and sensation seeking tendencies. Controlling for a host of variables, including wealth, income, age, number of stocks owned, marital status, and occupation, we find that overconfident investors and those investors most prone to sensation seeking trade more frequently.
Financial decision-making rarely follows models derived from economic theory, which postulate that people are rational economic actors. Psychological alternatives abound. The Tversky-Kahneman heuristics approach is dominating, but it needs to be complemented with emotional and personality factors, since cognitive limitations do not provide exhaustive explanations of the psychology of decision-making. In this paper, attitudes to financial risk-taking and gambling are related to sensation seeking, emotional intelligence, the perceived importance of money (money concern), and over-arching values, in groups of students of financial economics (N=93). Comparative data were collected for a group of non-students. Data on values were also available from a random sample of the population. It was found that the students of finance had a positive attitude to economic risk-taking and gambling behavior, a high level of sensation seeking, a low level of money concern, and gave low priority to altruistic values about peace and the environment. The subgroup of participants planning a career in finance showed an even more pronounced interest in gambling.
Nothing ventured nothing gained: Gender differences in financial risk behavior among Turkish university students
- S Çankaya
- M Ucal
- M Neil
Çankaya, S., Ucal, M., & O'neil, M. (2013). Nothing ventured nothing gained: Gender differences in financial risk behavior among Turkish
university students. International Journal Of Economics And Finance Studies, 5(1), 322-334.
Behavioral Investor Types-Determinants of Individual Investors' Financial Risk Tolerance
- Ç Çatak
- S Arslan
Çatak, Ç., & Arslan, S. (2023). Behavioral Investor Types-Determinants of Individual Investors' Financial Risk Tolerance. Journal of
Accounting & Finance, (99), 2345-2358.
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