Inequality and risk-taking behaviour

Abstract

This paper investigates social influences on attitudes to risk and offers an evolutionary explanation of risk-taking by young low-ranked males. Becker, Murphy and Werning (2005) found that individuals about to participate in a status tournament may take fair gambles even though they are risk averse in both wealth and status. Here their model is generalised by use of the insight of Hopkins and Kornienko (2010) that in a tournament or status competition one can consider equality in terms of the status or rewards available as well as in initial endowments. While Becker et al. found that risk-taking is increasing in the equality of initial endowments, it is found here that it is increasing in the inequality of rewards in the tournament. Further, it is shown that the poorest will be risk loving if the lowest level of status awarded is sufficiently low. Thus, the disadvantaged in society rationally engage in risky behavior when social rewards are sufficiently unequal. Finally, as greater inequality in terms of social status induces gambling, it can cause greater inequality of wealth.

RETHINKING RISK-TAKING: THE DEATH OF VOLENTI?

“…29 Hopkins's economic analysis determined that unequal social relationships can also increase risktaking behaviour, with those who are disadvantaged in society engaging in more risky behaviours. 30 If the theoretical grounding of volenti is a concern with what the claimant voluntarily risked, there are valid reasons to doubt the aptness of that belief. In its research on addressing and responding to consumer vulnerability, the Financial Conduct Authority (FCA) confirmed a link between risk-taking and financial difficulties.…”

“…question, stating "I do not, for my part, go so far as to say that the test is an objective one"(30).51 Nettleship v Weston[1971] 2 Q.B. 691.…”

Peran Orientasi Kewirausahaan Dalam Mendukung Teknologi Bersih

“…Hal tersebut diakrenakan, interaksi sosial berperan dalam keputusan pengambilan risiko sehingga wirausahawan harus menyesuaikan diri dengan lingkungan serta dalam memilih rekan kerja (Lopera & Marchand, 2018). Kekayaan awal dapat menurunkan pengambilan risiko, sedangkan pengambilan risiko itu sendiri akan meningkat apabila terjadi ketidaksetaraan imbalan dalam perusahaan (Hopkins, 2018). Tidak hanya itu, pengurangan tarif pajak pribadi dapat secara substansial mengurangi pengambilan risiko perusahaan (Cullen & Gordon, 2007).…”

Occupation-induced status, social norms, and economic growth

“…In other words, the borrower's utility cost of avoiding detection is at least equal to the utility gain of evading the repayment of debt. Taking (25) as an equality, solving for 1 t θ  , substituting the result in (24) and solving the resulting expression for 1 t R  yields 1 1…”