Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300919 
Year of Publication: 
2024
Citation: 
[Journal:] Journal of Risk and Financial Management [ISSN:] 1911-8074 [Volume:] 17 [Issue:] 2 [Article No.:] 65 [Publisher:] MDPI [Place:] Basel [Year:] 2024 [Pages:] 1-11
Publisher: 
MDPI, Basel
Abstract: 
Financial decision making requires a sound handling of chance events. However, various studies have suggested that people are prone to illusion of control, i.e., the belief that prospects of a chancy event are better if they are involved in the randomisation process. This paper reports results from an experiment (N=420) suggesting that psychological characteristics moderate risk-taking behaviour under such circumstances. For example, we find that subjects high in sensation seeking buy more tickets of a risky lottery if they determine the winning numbers themselves and the random event lies in the future. The findings suggest that “illusion of control” effects are at least partly driven by underlying (idiosyncratic) emotions/preferences rather than an actual belief in control. Regarding applications, the results emphasise the importance of individual characteristics for the behaviour of decision makers in a financial context.
Subjects: 
illusion of control
financial decision making
investment decisions
risk
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version

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