Tuesday, February 10, 2009

What Really Affects Investor Risk-Taking?

Due to my overwhelmingly exciting research proposal writing in the past few days, I wasn't able to post this story right away. Strangely enough, it actually relates to my senior thesis topic, which examines the role of emotions in financial decision-making and risk-taking, a subject most people might want to familiarize themselves with given recent market turmoils. Nicholas Kristof of the New York Times ponders a question which only recently took on new meaning: should there be more women in corporate boardrooms? Apparently, this was one of the many discussions at the World Economic Forum in Davos, Switzerland last week. Thankfully, they also debated issues that most people would consider more relevant, but new research does shed some light on this particular matter. Most management consultants would tell you that having a diverse range of opinions allows a group to make better decisions (until you simply have too many people and can no longer make decisions--see "Congress"). Also, research shows that men take more financial risks than women (shocking, huh?). Thus, a simple recommendation emerges. All we need are more women in high-ranking positions at banks to reduce the risk in the financial system. Voila!

Feel free to comment on this as is, but I'll follow up with more interesting facts I found while researching my thesis...

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