Money and Mindsets: An  Examination of Neuroticism’s  Impact on Risk-taking in the  Face of Scarcity

This paper conducted research on the relationship between scarcity and risk-taking, as well as how this relationship is moderated by neuroticism. The study employed established questions and tasks used in peer-reviewed papers. The study differed between the concepts risk tolerance and risk preference. Multiple linear regression was used to analyse the data, which was performed in SPSS. After analysing the data it was concluded that scarcity and risk-taking have a positive relationship when tested with the risk-tolerance variable. For the risk preference variable this effect was only present if gender was controlled. Neuroticism also moderates the effect of financial scarcity on risk-taking for the risk-tolerance variable, but not the risk-preference variable. It was found that neuroticism weakens the relationship between scarcity and risk- taking. The study contributes to literature about the effect of neuroticism on the tendency to take or avoid risks, as well as the literature on...Show moreThis paper conducted research on the relationship between scarcity and risk-taking, as well as how this relationship is moderated by neuroticism. The study employed established questions and tasks used in peer-reviewed papers. The study differed between the concepts risk tolerance and risk preference. Multiple linear regression was used to analyse the data, which was performed in SPSS. After analysing the data it was concluded that scarcity and risk-taking have a positive relationship when tested with the risk-tolerance variable. For the risk preference variable this effect was only present if gender was controlled. Neuroticism also moderates the effect of financial scarcity on risk-taking for the risk-tolerance variable, but not the risk-preference variable. It was found that neuroticism weakens the relationship between scarcity and risk- taking. The study contributes to literature about the effect of neuroticism on the tendency to take or avoid risks, as well as the literature on how scarcity can increase the tendency to take risks in practical setting such as treating those with gambling addictions or tendency to overspend. The paper was limited by its risk preference measure, which did not properly simulate a risk-reward scenario, contrary to the risk tolerance measure.Show less

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Money and Mindsets: An Examination of Neuroticism’s Impact on Risk-taking in the Face of Scarcity