We examine whether men and women of the same ability differ in their selection into a competitive environment. Participants in a laboratory experiment solve a real task, first under a non-competitive piece rate and then a competitive tournament incentive scheme. Although there are no gender differences in performance, men select the tournament twice as much as women when choosing their compensation scheme for the next performance. While seventy-three percent of the men select the tournament only thirty-five percent of the women make this choice. This gender gap in tournament entry is not explained by performance and factors such as risk and feedback aversion only play a negligible role. Instead the tournament-entry gap is driven by men being more overconfident and by gender differences in preferences for performing in a competition. The result is that women shy away from competition and men embrace it. * We thank Scott Kinross, who conducted all the experiments reported in this paper, for his excellent research assistance. We thank the editors and the referees who helped us improve the paper. We also

Competitive high ranking positions are largely occupied by men, and women remain scarce in engineering and sciences. Explanations for these occupational differences focus on discrimination and preferences for work hours and field of study. We explore an additional explanation, namely that women and men may differ in their selection into competitive environments. Men and women in a laboratory experiment perform a real task under a non-competitive piece rate and a competitive tournament scheme. Although there are no gender differences in performance under either of these compensations, there is a substantial gender difference when participants subsequently choose the scheme they want to apply to their next performance. Twice as many men as women choose the tournament over the piece rate. This gender gap in tournament entry is neither explained by performance before nor after the entry decision. Furthermore, while men are more optimistic about their relative performance, differences in beliefs only explain a small share of the gap in tournament entry. In a final task, we find that women are less likely to select tournament compensations even when they select it for past performance. In predicting tournament entry we use the compensation choice for past performance as a control for non-tournament specific gender differences (such as risk aversion, general feedback aversion and overconfidence), and we find a large residual gender effect.

This paper reviews the results from experimental measures of risk aversion for evidence of systematic differences in the behavior of men and women. In most studies, women are found to be more averse to risk than men. Studies with contextual frames show less consistent results.

Using a sample of 386 financial advisors and 458 of their clients, the study sought to determine how effective financial advisors and clients are at estimating risk-tolerance, and to test how well items from a risk tolerance test and demographic information can represent the judgmental process used to formulate these estimates (a “paramorphic representation ” of the decision). The client’s self rating and the advisor’s rating of the client produced a Pearson correlation of.40. Moreover, the advisor’s rating correlated at about the same level (r =.41) with the client’s score on a test of risk tolerance. The data also showed that when it comes to estimating one’s own risk tolerance, clients are better than are advisors at this task. The estimates could be represented paramorphically in terms of a few variables. It was observed that advisors assign too much diagnostic value to certain demographic variables in estimating client risk tolerance.

Behavioral economics is the subfield of economics that borrows from psychology, empirically tests assumptions used elsewhere in economics, and provides theories that aim to be more realistic and closely tied to experimental and field data. In a frequently cited survey article,

www.elsevier.com/locate/obhdp Angry men and disgusted women: An evolutionary approach

Many human behaviors, from mating to food acquisition and aggressiveness, entail some degree of risk. Testosterone, a steroid hormone, has been implicated in a wide range of such behaviors in men. However, little is known about the specific relationship between testosterone and risk preferences. In this article, we explore the relationship between prenatal and pubertal testosterone exposure, current testosterone, and financial risk preferences in men. Using a sample of 98 men, we find that risk-taking in an investment game with potential for real monetary payoffs correlates positively with salivary testosterone levels and facial masculinity, with the latter being a proxy of pubertal hormone exposure. 2D:4D, which has been proposed as a proxy for prenatal hormone exposure, did not correlate significantly with risk preferences. Although this is a study of association, the results may shed light on biological determinants of risk preferences. © 2008 Elsevier Inc. All rights reserved. Keywords: Testosterone; Risk; Risk-taking; Facial masculinity; 2D:4D

Many human behaviors, from mating to food acquisition and aggressiveness, entail some degree of risk. Testosterone, a steroid hormone, has been implicated in a wide range of such behaviors in men. However, little is known about the specific relationship between testosterone and risk preferences. In this article, we explore the relationship between prenatal and pubertal testosterone exposure, current testosterone, and financial risk preferences in men. Using a sample of 98 men, we find that risk-taking in an investment game with potential for real monetary payoffs correlates positively with salivary testosterone levels and facial masculinity, with the latter being a proxy of pubertal hormone exposure. 2D:4D, which has been proposed as a proxy for prenatal hormone exposure, did not correlate significantly with risk preferences. Although this is a study of association, the results may shed light on biological determinants of risk preferences. © 2008 Elsevier Inc. All rights reserved. Keywords: Testosterone; Risk; Risk-taking; Facial masculinity; 2D:4D

Many important economic decisions involve financial risk, and there is substantial evidence that women tend to be more risk averse than men. We explore a potential biological basis of the variation in risk-taking within and between men and women using an emerging measure of prenatal androgrens, the ratio between the length of the second and fourth digits (2D:4D). A smaller 2D:4D ratio has been linked to higher exposure to prenatal testosterone relative to estradiol, with men having lower ratios than women on average. In an individual decision-making task with financial stakes, we find that both men and women with smaller 2D:4D ratios chose significantly riskier options. We further find that the 2D:4D ratio can partially explain the overall difference in risktaking between men and women. Moreover, for men and women at the extreme ends of the digitratio distribution the difference in risk-taking disappears entirely. Thus, the 2D:4D ratio can at least partially explain variation in financially motivated risk-taking behavior both within and between sexes and offers strong evidence of a biological basis of attitudes toward risk-taking.

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