If I Were You: Self-Other Differences in Risk Taking

People who aren’t directly affected by the outcome of their actions take many social and economic decisions. Many of them involve some level of risk and uncertainty that hinders decision making. The milestone here is that subjects’ risk taking on behalf of stakeholders does not necessarily match the one taken for self. From the perspective of the behavioral economics, surrogate decisions could both lead to increase and decrease in psychological biases appearance. I provide experimental evidence that people express reduced risk aversion while managing someone else's money. Moreover, their decisions are less biased by emotional factors such as loss aversion and probability weighing. Still, the risk-seeking of subjects when they decide on behalf of stakeholder can be partly explained by other psychological phenomena – inequity aversion and altruism.