Affecting the gender difference in risk-taking behavior: a study of how the gender gap in risk-taking behavior can be influenced by a default effect

Abstract

The purpose of this study is to investigate the possibility of influencing the gender difference in risk-taking behavior. By doing so, we combine research from two different fields, namely literature on gender differences in risk-taking behavior, and the literature on default effects. We wish to contribute to the research in the intersection between these two fields. The question in focus is examined by gathering primary data through an incentivized economic experiment posted on the online platform Amazon Mechanical Turk. The 360 participants that contributed to our study were exposed to one of two treatment variations. Half the participants were initially given a default option encouraging risk seeking behavior, while the other half were given a default encouraging risk averse behavior. A randomized experiment enabled us to examine the causal relationship between the risk-taking behavior of the participants and the treatment they received. In accordance with previous research and our expectations, our findings indicate greater risk aversion among females compared to males. Furthermore, we find evidence of a treatment effect, meaning that people receiving the risky option as default, are exhibiting more risk seeking behavior. Our most interesting result is found when interacting the treatment effect with gender. When dividing our sample by gender, we find a significant treatment effect among females, and no evidence of a treatment effect among males. This implies that only females seem to be affected by a default bias, while males are equally risk seeking irrespective of the default option. In addition to the main analysis, we performed a short analysis of the influence of time preference on the tendency to stick with the default option, as we found this relationship interesting. Our findings imply that impatient individuals are significantly more influenced by the default effect than patient ones. The result of our study substantiates the possibility of affecting the gender gap in risk-taking behavior by changing the default option of a choice. By framing the choice with the risky option as default, the gender gap disappears. This is interesting from a policy perspective, since it provides a different interpretation of the drivers of gender differences in risk-taking behavior. It suggests that the gender difference is not only an expression of underlying risk preferences. Rather, it might be a result of the combination of a stronger default bias among females, and that the safe alternative often is the default in many decisions that we meet in everyday life.