In any number of situations it may be necessary for one party to make judgments as to the risk preferences of another: a lawyer negotiating a plea agreement for her client; a financial advisor developing an investment plan for a family; a doctor prescribing a course of treatment for his patient; or a real estate agent recommending how to market a seller's property. Often this judgment is based on fairly limited information. In many cases, the prediction may be based on little more than the predictor's "read" of the individual. Financial advisors frequently have their clients complete a short risk assessment survey, but even this type of instrument is likely to give only a cursory indication of a client's true risk preferences and is likely not tested for reliability. In such circumstances, predicting the risk preferences of another may constitute a guess informed by little more than visual or verbal clues provided in a brief meeting. Lacking more relevant information, the predictor may resort to stereotypes to inform his prediction.
Stereotyping is the act of assigning to a member of a particular group a characteristic or trait based solely on the individual's membership in that group. An individual is not seen as a distinct being with his own individual attributes but solely as a member of a group conforming to some pattern. In cases where individuating, judgment-relevant information is not available, drawing on stereotypes may improve one's ability to predict another's actions (assuming the stereotype contains some kernel of truth). When presented with individuating, judgment-relevant information regarding the characteristic or action being predicted, downplaying any stereotype in favor of this information should improve the accuracy of predictions.
Whether men and women differ in their attitudes toward risk and in their willingness to accept risk is the subject of much debate. Most evidence suggests that women perceive situations as inherently riskier than men perceive the same situations, women engage in less risky behavior, and they choose alternatives that involve less risk. (1) Consistent with the evidence of a gender difference in risk aversion, Ball, Eckel, and Heracleous (2010), Daruvala (2007), Eckel and Grossman (2008, EG hereafter), Grossman and Lugovskyy (2011), and Siegrist, Cvetkovich, and Gutscher (2002) report evidence suggesting that women are perceived to be more risk averse than men; when predicting the risk choices of others, experiment subjects apply the gender stereotype.
This paper tests the relative importance of individuating information and gender stereotypes when predicting the risk preferences of others. For this study, all subjects participate in a four-part experiment. First, each subject completes a risk-assessment survey. Second, they then each select a gamble to play from a set of six gambles differing in expected payoff and degree of risk. Third, each subject then attempts to predict the gamble choice of every other subject. In one treatment, subjects make initial predictions having only visual clues regarding each subject (i.e., subjects stand up one at a time). Fourth, subjects are permitted to revise their predictions after being provided individuating information (i.e., the other subjects' responses to two of the risk-assessment survey questions). In the second treatment, the order is reversed and initial predictions are first made based on survey responses and then predictions are reassessed based upon visual clues.
I find: (1) additional evidence of the existence of gender stereotyping, and more importantly, (2) the persistence of such stereotyping even when other individuating, both judgment-relevant and judgment-irrelevant, information is provided. Results indicate that in isolation both the gender stereotype and the individuating information condition initial predictions. However, and more importantly, when visual clues are provided first, the revised predictions, after a subject's survey responses are known, only marginally reduce the evidence of stereotyping. …