Personality Type, Gender and Risk: A Framing Analysis

Abstract

ABSTRACT Recent literature has explored the effect of personality type on economic education. This paper extends that literature by tying personality types and to individual decision making for issues involving risk and uncertainty. This study replicates findings that the framing of uncertain decisions, although a violation of strict expected utility theory, is a widespread phenomenon. Through reported personality measures, framing, gender, and personality types are linked. These finding demonstrate that both personality types and are important when considering the evaluation of decisions involving risk and uncertainty. Personality types, as well as gender, are found to yield significant differences in decision making both in terms of risk preference and framing. Since behavior is influenced by personality type and gender, then the concern for economic educators is that learning is also influenced. INTRODUCTION Risk preference and preference reversal, also known as framing, are significant factors for evaluating decisions involving risk and uncertainty. Behavioral studies have explored issues where the framing of questions involving insurance, gambling, and medical decisions influences perceptions. Experimental studies have documented that decision-makers react differently to the same proposition depending upon the manner in which it is presented. This phenomenon is known as preference reversal and violates a strict expected utility analysis of decision-making (Machina, 1987). A related question is which individuals are more likely than others to be prone to either risk avoidance or preference reversal? We explore this question by incorporating personality types and into an analysis of risk preference and preference reversal. It is the purpose of this paper to explore the link between personality, gender, risk, and framing. GENDER, PERSONALITY TYPE, AND DECISION MAKING Gender is one of the most important independent variables that should be investigated when looking at risk and decision making (King & Hinson, 1994). Women communicate and make decision differently than men. Brown (1996) states that gender begets (p 243) and in decision making and risk situations, behaviors consistent with roles are most likely to be affected. One of the most evident manifestations of roles is in the risk women are willing to take in making decision. Recent Literature concludes that women have a lower preference for risk than men (Hyde, 1990; Powell & Ansic, 1997; Sonfield, Lussier, Corman, & KcKinney, 2001) but no differences in decision making values or styles (Powell, 1990). Women are, in general, more likely to choose the certain outcome. Personality also plays a part in how decisions are made. Personality types have been linked to management and decision-making and are correlated with managerial responsibilities and occupations (Keirsey, 1998). One of the more common approaches to measure personality is the development of Myers-Briggs Type Indicators: Extravert or Introvert, Sensor or Intuitive, Thinker or Feeler, and Judger and Perceiver. Myers-Briggs Type Indicators, based on Jungian psychology type theory, is used as a framework to discuss personality types and their potential to influence decision making under risk and uncertainty. Myers and McCaulley (1989) explain each: * Extravert-Introvert index (E or I) reflects how an individual relates to the world of people and things * Sensor-Intuitive index (S or N) reflects how a person chooses to gather information or perceives the world * Thinker-Feeler index (T or F) reflects how a person prefers to make judgments or decisions * Judger-Perceiver index (J or P) reflects how a person prefers to deal with the world. These eight letters and the traits they represent can be combined into sixteen possible combinations to further explain why people are different from each other. …

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