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Perceived Relative Wealth and Risk Taking
Report

Perceived Relative Wealth and Risk Taking



Editorial Rating

7

Qualities

  • Analytical
  • Innovative
  • For Experts

Recommendation

Academics Dietmar Fehr and Yannick Reichlin explore the connection between people’s perception of their financial status and their willingness to take risks. Clearly, psychology plays a role, and different individuals will assess their odds in different ways, but the results of this research on relative economic standing could add to the toolkit leaders use to address income inequality. Scholars and financial professionals interested in how people’s beliefs about their social positions influence their economic behavior will find valuable insights in this authoritative report.

Take-Aways

  • Your perception of your relative financial status influences your risk-taking decisions.
  • Your assessments of the risks you take arise from your “locus of control.”
  • Those who see themselves as having low social status take more risks and experience financial inequity.

About the Authors

Dietmar Fehr is a professor at Heidelberg University in Germany, and Yannick Reichlin is a researcher at the European University Institute in Italy.


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