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An Examining of Economic Stress and its Impact on Financial Risk-taking Through Perceptions of Control

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Date

2018-05-28

Authors

Quimpo Katter, Joana Katherine

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Abstract

The current project consists of two studies that explore the theoretical framework linking economic stress and financial risk-taking, with a focus on the importance of perceived control. Specifically, it was hypothesized that economic stress would influence financial risk-taking behaviour by first influencing an individuals sense of personal control over their own situation, which would, in turn, influence their perceived control over risky behaviours. The role of related personality traits in influencing perceptions of control and risk-taking behaviours are also considered. Study 1 explored the effect of an economic stress manipulation on the extent that an individual perceives his or her own financial situation to be under his or her personal control, and how control perceptions are associated with perceived risk in gambling and investing activities. Study 2 expanded on the exploration of control perceptions to include perceptions of both personal internal control and control by outside forces, to fully capture how perceptions of control shift under economic stress. Partial support for the hypothesized model is found. Theoretical and practical implications of the study findings are discussed.

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Behavioral sciences

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