Risk Preferences and Misconduct: Evidence from Politicians

DSpace/Manakin Repository

Risk Preferences and Misconduct: Evidence from Politicians

Citable link to this page

 

 
Title: Risk Preferences and Misconduct: Evidence from Politicians
Author: Minor, Dylan Blu
Citation: Minor, Dylan. "Risk Preferences and Misconduct: Evidence from Politicians." Harvard Business School Working Paper, No. 16-073, January 2016.
Full Text & Related Files:
Abstract: When seeking new leaders, business and government organizations alike often need individuals that are less risk averse, or even risk-seeking, in order to improve performance. However, individuals amenable to increased risk-taking may be more likely to engage in misconduct. To study this issue, we explore US political scandals and the implicated politicians’ portfolio choices. We find that a politician allocating all of her portfolio to risky investments has double the odds of being involved in a political sandal compared to a politician allocating all of her portfolio to safe investments. This suggests that those who are more willing to take risks in their personal finances are also more likely to engage in misconduct. We validate portfolio choice as a measure of risk preferences by correlating actual high-stakes investment choices (average $700,000 US) to conventional laboratory lottery choices (average $51 US) of wealthy investors.
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:24009684
Downloads of this work:

Show full Dublin Core record

This item appears in the following Collection(s)

 
 

Search DASH


Advanced Search
 
 

Submitters