Gender and Financial Risk: The U.S. and Brazil

Abstract

This study intends to add to the debate whether differences in risk behaviours exist between genders. These results are used to inform the conversation about the role of gender in management and leadership. The design is an investment game in which participants could gain or lose money from investing in a hypothetical risky asset. Participants were first paid $10 to complete a survey. They could then invest any or all of this $10 in a risky asset with a known probability of gaining and losing. After winnings from the first round of investments were dispersed, a second chance to invest in the same asset was offered. The findings suggest that there is no difference between genders in their willingness to invest into the risky asset. This held true for the pooled data and for the U.S. and Brazil data separately. It is often assumed that the inherent risk behaviours differs between genders and, often times, this information is used when making promotion or hiring decisions. The methodology offers a unique approach to measuring financial risk taking at an individual level. The investment game included salient rewards and subjects were in a setting where other factors could be controlled.