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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Business Administration

No 2006:3:
Attitudes to economic risk-taking, sensation seeking and values of business students specializing in finance

Lennart Sjöberg () and Elisabeth Engelberg ()

Abstract: 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.

Keywords: Decision making; finance; risk attitude; financial advice; (follow links to similar papers)

30 pages, March 31, 2006, Revised October 15, 2006

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