finance and investment society unfair

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Finance and investment society unfair qannas investments limited prospectus supplement

Finance and investment society unfair

In this case, the good result would be a well-functioning economy in which capital is efficiently distributed. What seems to be an unjust distribution of rewards from the outside, becomes a just distribution when viewed from within because that distribution is necessary to the proper functioning of the system.

Within the system, the governing rules prescribe the way rewards are distributed and individuals must behave in order for the overall good of the system to be achieved. In financial markets, that means creating a system in which participants are incentivized by potential rewards to look for arbitrage opportunities in which to invest their funds.

Market participants benefit from the pursuit of arbitrage opportunities even though the rewards of these pursuits are really the product of luck. Changing the rules to redistribute gains evenly among the luck and the unlucky—which is to say, all gains—would diminish the incentive to pursue asset mispricings, which would result in less knowledge in the marketplace and more mispricing.

Systemically encouraging mispricing would make capital allocations more inefficient, producing a society that is collectively less wealthy. This is why I think Schwartz is wrong about the kind of financial system that would be chosen from behind a veil of ignorance. To put it still differently, the justice of financial markets is rooted in whether individuals are rewarded not according to excellence—but whether individuals are given their due according well-crafted rules tailored to producing the overall goods at which financial markets aim.

That is, whether the rewards accompanying the internal rules where by investors see gains when the value of their financial assets appreciates and see losses when the value of their financial assets depreciates. The stock market is not unfair. Sign up for free newsletters and get more CNBC delivered to your inbox. Get this delivered to your inbox, and more info about our products and services. All Rights Reserved. Data also provided by. Skip Navigation. Markets Pre-Markets U. Traders work on the floor of the New York Stock Exchange during morning trading.

Fender sales boom as guitar playing surges during the pandemic. Bob Woods. VIDEO ResMed CEO on digital health, treating patients outside the hospital. Williams-Sonoma CEO talks being 'digital first,' but not 'digital only'. It has been shown that the propensity to make risky decisions is affected by numerous individual variables Foster et al. An inspiring area of research focuses on the way the previous experience of being treated unfairly impacts subsequent risky decisions.

This direction of studies seems to be exceptionally important as the world we live in is characterized by systemic injustice as well as everyday experiences of unfair treatment. It has been shown that experience of being treated unfairly influences subsequent behaviors and decisions. Not only does it impact interactions with the perpetrator, as the victims tend to respond with unfair treatment in return Falk and Fischbacher but also might influence subsequent interactions with new partners as people pass on unfair behavior towards uninvolved third persons Gray et al.

There are also some studies suggesting that the experience of being a victim of unfair treatment spills over and alters subsequent behavior. For example, Houser et al. Most importantly, however, it was demonstrated that a feeling of inequality or a personal relative deprivation makes people more likely to gamble and more likely to choose risky financial options Callan et al. Although none of the studies examined the effects of being a victim of unfair treatment directly, they focused on the consequences of states which reflect the lack of fairness in the distribution of outcomes i.

The results of those studies are very suggestive. Nevertheless, we claim that there are at least two reasons why they cannot be generalized to a conclusion that suffering unfairness makes people more prone to take risk. Firstly, all the studies focused either directly on the tendency to gamble or operationalized the propensity to take risk in such a way that the tendency to choose risky options in gambling tasks was, in fact, investigated.

Meanwhile, the propensity to take risk was demonstrated in numerous studies to be highly domain-specific Hanoch et al. Further studies are needed to replicate the results and check whether being treated unfairly affects the propensity to take financial risk in domains other than gambling.

Secondly and perhaps more importantly, money is not the only resource that can be unfairly distributed, and people often experience unfairness in other domains. For example, one can be given a smaller office than co-workers, a less interesting task to complete or less time than others to perform an assignment.

At the same time, in the studies conducted so far, the feeling of inequality or personal relative deprivation were induced in a financial area. Subsequently, a propensity to take risk was measured and it also referred to money. As a result, both the experience and the subsequent decision involved the same kind of resources. This generates further reasons for additional studies. In the first place, the experience of being treated unfairly in a financial domain cannot be translated to other areas in which unfair treatment can be experienced, as there are important differences in the way people perceive money and other resources Lea and Webley Furthermore, the existing experiments do not allow to determine whether the observed effects of unfairness on the propensity to take risk are genuinely due to the impact of unfair treatment itself.

If the first assumption is true, people treated unfairly in other domains should be also more prone to take financial risk compared to those treated fairly. If the second assumption is a case, experience of unfairness in a non-financial domain should not increase the propensity to take financial risk. We assume that a change of experimental conditions resulting in an experience of unfair treatment a non-financial domain and subsequent risky decisions in a financial one will shed more light on the issue of the impact of unfair treatment on decision making.

Concluding, the aim of the studies is twofold. Firstly, we want to provide more evidence to support previous findings indicating that the experience of unfairness makes peoplemore likely to take risk than those who were treated fairly. At the same time, taking into account the domain-specific character of risky choices, we aim to extend the results of the studies conducted so far by verifying whether this kind of experience will also affect domains of financial risk-taking other than gambling.

Secondly, we want to check whether an experience of unfairness coming from a domain different than a subsequent decision will yield similar results to the ones obtained in studies in which the experience and the decision were made in the same financial domain.

Although risk-taking traditionally has been considered as an individual difference trait that is domain-invariant Eysenck and Eysenck , further studies demonstrated that the propensity to take risk may also be domain specific Hanoch et al.

This implies that, apart from their general tendency to take risk, people may be risk-averse in one domain and risk-seeking in another. Following this idea, researchers have conducted studies across a variety of domains of risky decision making. For example, Weber et al. Using this scale, Hanoch et al. Furthermore, Vlaev et al.

Another line of research on situational factors influencing risk preferences focuses on the decision frames. It is important to notice that one can take risk in order to gain something or in order to prevent losing something. Kahneman and Tversky demonstrated the function of value for gains and losses and argued that people may behave differently depending on whether the outcomes are described in terms of gains or in terms of losses. Abovementioned findings indicate that the propensity to take risk a complex construct.

Thus, dispositional as well as contextual factors should be taken into account in the attempts to understand it better. Equality is a deep-seated behavioral norm. At default, people split outcomes equally i. This effect is often demonstrated using a dictator game DG or an ultimatum game UG.

During DG, one player decides on a distribution of money or other goods that a second player must accept Guala and Mittone During UG, one participant offers some portion of the endowed money to the second participant, who can either accept or reject the offer. If the offer is accepted, both players receive money. If the offer is declined, both players receive nothing. According to standard game theory, participants should propose next to nothing and those who are offered the money should always accept it Guala People are also strongly inequity averse e.

As a consequence, they lose any endowment they could have earned. Moreover, people who witness other people being treated unfairly demonstrate a willingness to administer a punishment even when it is costly for them Henrich et al. It has been demonstrated that violations of fairness can influence related decision making. The victims of unfairness tend to pay back by treating the author of an unfair offer unfairly as well Falk and Fischbacher The consequences of unfairness influence not only the author of the unfair offer but can transmit to an innocent third person Gray et al.

Furthermore, a handful of studies has shown that unfair treatment affects subsequent, unrelated tasks. Houser et al. Unfair treatment can also help performance in sport Axt and Oishi There is also a link between unfairness and the propensity to take risk. In a study by Mishra et al. The victims of inequality engaged in significantly greater risk-taking than other participants. Similarly, Payne et al. In both studies, the propensity to take risk was measured using a gambling task i.

Other studies show that an experimentally induced feeling of personal relative deprivation which is perceived as a key individual-level outcome of inequality, see: Smith et al. Although none of the studies examined directly the effects of being a victim of unfair treatment, they focused on the lack of fairness in the distribution of outcomes i.

Thus they provide indirect, albeit suggestive, evidence for the link between being a victim of unfair treatment and the propensity to take risk. The studies reviewed in the first part of this manuscript indicate that being a victim of an unfair treatment influences subsequent behaviors and decisions.

There is a vast literature demonstrating the impact of receiving an unfair offer on decisions in subsequent tasks of the same type the split of endowed resources. However, it is unclear how being a victim of unfairness affects decisions in unrelated tasks.

Nevertheless, there are several studies investigating this issue and their results allow to hypothesize that unfair treatment spills over into individual financial decisions and increases risk-taking. However, further studies are needed in order to verify whether it is possible to claim that there is a link between experiencing an unfair treatment and an increased propensity to take financial risk.

Firstly, as mentioned earlier, the result should be extended to other domains of financial risk-taking, for example, investment decisions. Furthermore, given the fact that in previous studies the experience of unfair treatment came from the same domain as subsequent risky choices a financial one , it should be established whether such experience coming from a different domain impact risky decisions in a similar way.

We decided to fill these gaps and conducted studies in which the experience of un fairness comes from a task that is of a different nature to the subsequent one and, apart from the propensity to gamble, the propensity to take investment risk is measured. Furthermore, it has to be noted that fairness can be violated in both the positive more-than-fair and negative less-than-fair directions.

The first situation is not often included in studies on the effect of unfair treatment. In existing studies, people who benefited from an unfair treatment tended to behave in a similar way to those that experienced fairness Gray et al. However, taking this issue into account might help to shed some more light on the investigated mechanism.

Therefore, we decided to consider both directions of fairness violation in the present experiments. Moreover, the propensity to take risk in a given domain e. When using a questionnaire measuring a general propensity to take such risk, the score obtained by a participant reflects the result of several choices made in various contexts for example the tendency to play poker, bet at horse races, etc. Hence, apart from using psychometrical scales measuring general tendencies to take risk, we have introduced additional measures — specific tasks — allowing to assess the level of the tendency to take risk in the most important contexts in each domain.

Given the abovementioned gaps in knowledge, we have conducted a set of three experiments investigating the influence of the experience of un fair treatment in financial and non-financial areas on the propensity to make risky financial choices in investment and in gambling domains.

The studies take into account gain and loss decision frames in gambling tasks. Moreover, two measures of the propensity to take risk in each domain were used to reflect two levels of measurement: a general propensity to take risk in a given domain and choices in specific tasks within this domain. We predict that the experience of being a victim of financial unfairness will make people more prone to take financial risks in both investing and gambling domains than the experience of being its beneficiary or being treated fairly.

As there is not enough empirical evidence to predict the result of non-financial un fairness on the propensity to make risky financial choices, we leave it as an open question. Results consistent with those obtained in a financial condition will suggest that the effects obtained in the literature are observed due to the experience of general unfair treatment.

Inconsistent results will indicate that the effects observed so far are due to other factors than unfairness and will indicate a direction for further studies. Study 1 aimed to check whether and how an experience of being treated fairly or being a beneficiary or victim of unfairness affects the propensity to make risky investment choices and to take gambling risks.

The study employed an experimental design. An informed consent was obtained from all participants. The study was approved by the Ethics Board of [identifying information removed]. The experimental task was prepared for online panelists who are awarded points for each completed survey that may subsequently be exchanged for a range of material goods.

There were 3 scenarios prepared for the purpose of the study — one for each experimental condition. Footnote 1 As a result, participants of the study experienced either fairness or being a victim or a beneficiary of unfair treatment. Participants were asked to indicate the likelihood that they would engage in the described activity or behavior on a scale from 1 very unlikely to 7 very likely.

The task also measured the general riskiness of the created portfolio riskiness of portfolio reflected by the percentage of shares in the portfolio dependent variable. This variable was measured using two questions e. The questions were formulated in the same manner as the questions presented by Kahneman and Tversky We changed the amounts Footnote 4 used in the task to make it more appropriate for Polish reality. The expected values of both options in each question were the same 1, PLN.

Firstly, the participants took part in an experimental manipulation task. After that the participants completed the tasks measuring their propensity to make risky financial choices in a rotated order. Finally, they provided demographic information.

All the materials were administered in Polish. At the end of the study, the participants were fully debriefed. All the participants, regardless experimental conditions, received 40 points for completing the survey. Preliminary analyses revealed comparable performance for males and females. Moreover, no relationship between age and the propensity to take risk was observed.

Therefore these variables are not discussed further. Further analysis aimed to check whether the experimental groups differed in the amount of money assigned to the different forms of investments: bonds, mutual funds, and stocks. A 3 experience of un fairness: fair, unfair-beneficiary, unfair-victim — between subjects IV by 3 form of investment: bonds, mutual funds, stocks — within subjects IV mixed-design ANOVA, with the percentage of the amount of money assigned by participants as a dependent variable, was conducted.

The mean percentages of the amount of money assigned to different forms of investment for each of the groups analyzed are presented in Fig. Mean percentages of the amount of money assigned to different forms of investment between experimental groups with SDs in brackets — Study 1.

The results of the first study show that the participants from the unfair-victim group had a higher general investment risk-taking propensity and were prone to build riskier investment portfolios with more stocks and fewer bonds than the participants from the unfair-beneficiary group. In terms of gambling risk, the effects of unfair treatment were observed only in the scenario with the loss frame of decision.

The participants from the unfair-beneficiary group decided to choose the sure option in a lottery less often than was expected. However, it is important to notice that the scale does not distinguish between the gain and loss decision frames. All the statements refer to situations in which the decision-makers choose between an unsure financial gain or a potential loss of money that was assigned for a given gamble e. A scenario when a decision-maker faces a choice between a sure loss of his or her own money and can opt for a chance of not losing it at all but risks losing much more at the same time is not included e.

The obtained results seem promising and support our hypothesis. However, there might be an alternative explanation for the observed effects. In Study 1, the number of points that were supposed to be shared between panelists was constant. As a result, the experimental groups differed in the amount of points participants were supposed to obtain for participation in the study.

Therefore, the differences in the propensity to take financial risk might have been a result of the different amounts of points the panelists expected to obtain at the end of the study. Although it seems unlikely, we conducted a study to rule out this possibility.

Study 2, analogously to Study 1, aimed to check whether and how the experience of fair and unfair treatment affects the propensity to make risky investment and gambling choices. Study 2 differentiates between the impact of social phenomena — receiving a fair or an unfair split from another person — and the effects of having a larger or smaller endowment, which was not covered in Study 1.

Study 2 employed an experimental design. The study was conducted on a sample of Polish adults, via an online panel. The scenarios used in Study 2 were very similar to those used in Study 1. They differed only in the amounts of points that were supposed to be divided between the participant and the other panelist and the number of points finally received by the participants, which was constant across conditions.

In the unfair-beneficiary condition, 29 points were divided, 9 points were assigned to the panelist and 20 points to the participant. Further analysis aimed to check whether the experimental groups differed in the amount of money assigned to different forms of investments: bonds, mutual funds, and stocks. A 3 experience of un fairness: fair, unfair-beneficiary, unfair-victim — between subjects IV by 3 form of investment: bonds, mutual funds, stocks — within subjects IV mixed-design analysis of variance ANOVA , with the amount of money assigned by participants as a dependent variable, was conducted.

The mean percentages of the amount of money assigned to the different forms of investment for each of the groups analyzed are presented in Fig. Mean percentages of the amount of money assigned to different forms of investment between experimental groups with SDs in brackets — Study 2.

Similarly to the results of Study 1, the results of Study 2 showed that people from the unfair-victim group built riskier portfolios with fewer bonds and more stocks than people from the unfair-beneficiary group and were more prone to take general investment risk than the fair group.

Moreover, in Study 2, the participants from the unfair-victim group built riskier portfolios with more stocks and fewer bonds than the participants from the fair group. Furthermore, the participants from the unfair-beneficiary group were more prone to take financial risk as measured by the DOSPERT subscale than the participants from the fair group. In terms of gambling risk, similarly to Study 1, people from the unfair-beneficiary group decided to choose the sure option in a lottery task in the loss frame less often than was expected.

Moreover, in Study 2, people in the fair group chose the sure option in a lottery task in the loss decision frame more often than was expected. However, it is not clear if the observed effect is general and also occurs when people experience un fairness in a non-financial scenario. We conducted the third study to answer this question. Study 3 aimed to check whether the experience of fair and unfair treatment affects the propensity to make risky investment and gambling choices only when the experience comes from a scenario in the financial domain or whether the effect is more general and may be observed also in a different, non-financial domain.

The study was conducted on a sample of Polish people via an online panel. The experimental task was prepared for the online panelists. After registration to the online panel, the panelists receive many invitations to take part in various surveys. The number of invitations is much higher than the number of responses, which means that people receive many more invitations than they want to answer. However, not all the surveys are perceived as interesting or pleasurable.

Some of them might be viewed as boring or arduous. We can anticipate that the panelists would like to be invited only to the most pleasurable surveys but this is not possible. In each of them, the panelists participants of the study were informed that the Panel has implemented a research project and is currently testing how respondents perceive different ways of assigning surveys to individual panel members.

Next, they learned that for this purpose a pool of interesting and pleasant surveys has been selected and will be assigned to panel participants in an unusual way. As a result, the participants experienced either fairness or were beneficiaries of unfairness or were victims of unfairness. Furthermore, the mixed-design ANOVA [3 experience of un fairness: fair, unfair-beneficiary, unfair-victim — between subjects IV by 3 form of investment: bonds, mutual funds, stocks — within subjects IV , with a percentage of the amount of money assigned by participants as a dependent variable was conducted to check whether the experimental groups differed in the amount of money assigned to different forms of investments: bonds, mutual funds, and stocks.

Mean percentages of the amount of money assigned to the different forms of investment for each of the groups analyzed are presented in Fig. Mean percentages of the amount of money assigned to different forms of investment between experimental groups, with SDs in brackets — Study 3. The results of Study 3 were exactly opposite to the results of Studies 1 and 2.

People from the unfair-victim group in a non-financial scenario of experimental manipulation were generally less prone to make risky investment choices measured by the DOSPERT subscale and built safer investment portfolios with more bonds and fewer stocks than people from the unfair-beneficiary and fair groups.

Moreover, the participants from the unfair-beneficiary group were generally less prone to take investment risks measured by the DOSPERT subscale than people from the fair group. In terms of the propensity to take gambling risks, the results were also exactly the opposite to those obtained in Studies 1 and 2 and showed that the sure option in a lottery task was chosen less often than expected by people from the fair group and more often than expected by participants from the unfair-beneficiary group.

Similarly to the results of Studies 1 and 2, this relationship was observed only in lotteries with a loss scenario and there were no significant differences observed in the level of general propensity to take gambling risk measured by the DOSPERT subscale. We induced the experience of being treated unfairly in two domains, aiming to check whether previously observed effects of financial inequality, unfair treatment, and personal relative deprivation in a financial domain hold when the unfair treatment concerns other resources.

We have also taken two domains of financial risk-taking into account, bearing in mind the studies indicating that the propensity to take risk is strongly domain specific. Moreover, the possibility of financial loss, as well as chances for financial gain, was included in lottery scenarios. The results of the conducted experiments confirm the significant role of the experience of un fairness in explaining subsequent risky financial choices, although the observed effects were rather weak.

Importantly, the effect of the un fair treatment seems to depend on the type of its consequences — financial or non-financial. Our analyses show that while the experience of unfairness in the financial domain led people to make more risky investment choices, the experience of unfair behavior in the non-financial domain caused the reverse effect.

Specifically, people who experienced unfair negative financial consequences were more prone to take investment risks than those who experienced unfair behavior with positive financial consequences and those who experienced fair treatment. At the same time, the experience of unfair treatment in a non-financial domain led people to be less likely to take investment risks than people from other groups.

We did not observe any differences between participants from the three experiential groups in terms of their general propensity to gamble nor in terms of preferences toward sure or unsure options in lottery tasks with a gain frame. However, an important role of decision frames was demonstrated while investigating the propensity to take gambling risks.

In a lottery task with a financial loss frame, the beneficiaries of unfair treatment preferred the unsure option over the sure one. On the other hand, people who experienced fair treatment tended to choose the sure option more often than the unsure one.

In line with the results regarding investment risk, the effect was reversed for the loss frame in the unfair non-financial experience scenario. The results of Studies 1 and 2 regarding the propensity to take investment risks are in line with the existing literature reviewed in the introductory part of this paper. We have demonstrated that being a victim of unfairness in a financial domain makes people more prone to take investment risk.

Although neither the influence of unfair treatment on the propensity to take risk has not been directly investigated before, nor was the propensity to take investment risk, the existing literature clearly allowed to expect such results. Therefore, we have confirmed the effect that had been indirectly observed before, and extended results of previous studies by demonstrating that an experience of being treated unfairly might affect investment decisions as well.

Previous studies allowed to expect that participants who were treated unfairly would be more prone to gamble. The existing literature showed that a feeling of inequality or personal relative deprivation in a financial domain makes people more prone to gamble Callan et al. Nevertheless, this effect was not observed in our experiments when the experience of being treated unfairly was induced. One of possible explanations might be the amount of money the participants decided about.

While in the present studies risky choices concerned amounts of money pretested to be meaningful Sekscinska , in the studies conducted so far, risky choices involved very small quotas. In a study of Mishra et al. Similarly, in a study of Payne et al. In the studies of Callan et al. Such relatively small amounts of money were probably not perceived as meaningful by the participants.

Footnote 6 Sekscinska Consequently, they were more likely to put them at risk. This assumption is based on studies showing that small amounts of money are spent in a different way than more substantial amounts, for example, they are consumed rather than spend or invested Sekscinska et al. Nevertheless, this explanation requires further studies. It has to be noted that the tendency to gamble is most often explored in a gain frame and little is known about factors influencing decisions in a loss frame.

The obtained results are the first in this field, therefore they should be interpreted rather as a clue to conducting further studies than as a finding that fills the gap in knowledge. Most interestingly, the results of Study 3 question the generalizability of the results obtained in previous studies focusing on the consequences of unfair treatment, and suggest that experiencing unfairness in a financial domain might influence subsequent decisions differently than experiencing unfairness in, for example, the social domain.

The results indicate that the impact of unfairness on the propensity to take risk is context-specific and does not extend easily on a situation when unfairness is experienced in one domain and a risky decision is made in a different domain. The results of Study 3 highlight context-dependency of risk preferences and suggest that it is not the experience of unfairness per se that influences subsequent risky choices but it is the congruence of experience domain and decision domain that is crucial.

As Mishra suggests, the risk-sensitivity is a product of a simple heuristic: a person in a situation of a high discrepancy between current and desired state should be more prone to take risk because it offers the means for pursuing desirable outcomes that would otherwise be unavailable.

Therefore, if risky decision do not allow to redeem previous loss or compensate an inequality, individuals should not be motivated to take risk. In the present study, participants who were victims of an unfair financial offer might have sought compensation for their financial loss compared to a situation if they had been paired with another participant, who decided to split the points in a fair way by taking financial risk.

A study of Vermeer and Sanfey also demonstrated that risk preferences depend on specific context. They noticed that the observation that prior losses often induce greater gambling than prior gains is usually confounded with participant performance. Participants from the first experimental group experienced either financial gain or loss based on their performance. Monetary gain or loss group independent from performance were randomly awarded to the participants from the second experimental group.

In the third experimental group, participants were given success or failure feedback based on their performance but no monetary incentive. Next, all participants were presented with a gamble that they could play or pass. The results showed that risk preferences are differentially susceptible to prior positive and negative contexts, though only when these preceding contexts involve monetary gains and losses.

Thus, this study also demonstrated that previous negative and positive experiences in a non-financial context did not affect monetary risk preferences. The abovementioned reasoning explains possible reasons why we did not observe increased propensity to take financial risk among participants who experienced unfairness in a non-financial domain. However, we have also observed a lower propensity to take financial risk in this group compared to fair and unfair-beneficiary conditions.

As we are not aware of studies investigating the impact of non-financial losses on risky financial decisions, we did not predict this effect. Therefore, we can only offer some post-hoc explanations. We believe that decreased propensity to take financial risk in the non-financial victim condition is in line with other studies showing that individuals who watched a sad movie clip and consequently were in an induced depressed mood were more conservative in taking risk than those who were in a neutral or elated mood Yuen and Lee Although our pilot studies see Supplemetnary Materials 1 indicated that all the participants treated unfairly, regardles from which domain came the experience, reported simmilar, lowered mood, only the participants from non-financial condition had no possibility to reedem their loss compared to what they could have expected.

We suggest the presence of the possibility to make up for lossses or the lack of it can explain the schift in risk preferences demonstrated by the participants. We are aware that there might be other explanations for the different results in terms of the propensity to take risk after experiencing an unfair treatment with financial and non-financial outcomes, although further studies are needed to replicate the effect obtained in Study 3 across various domains of non-financial unfair treatment and various domains of risky decisions in order to discover the psychological mechanisms underlying the obtained results.

Nevertheless, the results of this study offer issues and questions that we believe serve as avenues for future research and thus we find them very valuable. Specifically, further studies should focus on the importance of the congruence of experience domain and decision domain.

The primary focus of the present studies was the propensity to take financial risk. However, in order to broaden our understanding of the obtained results, consecutive research project will take into account other domains of risk-taking, for example, social or health. This will not only allow to test the hypothesis referring to the congruence of domains but also to determine whether the experience of unfairness also affects other domains of risk-taking. The present studies have several important theoretical implications for the literature on fairness and risk-taking.

This issue, to our best knowledge, has not been directly investigated before.

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It seems to be mostly luck at work. The large role chance plays in market success seems like a pretty bad thing to people who hold a particular view of the world in which winning should be connected with skillfulness. The fact that winning—regardless of whether it is attached to skillfulness—is unfailingly rewarded in financial markets, while skillfulness is only rewarded when attached to winning, looks like a flaw in the system. For one, the arbitrary nature of investing potentially poses fairness concerns.

Intuitively, it seems unjust that some should be rewarded by chance market moves while others are victims. Behind this veil, those drafting the social contract do not know whether those whom they represent will be fortunate or unfortunate. As such, he posits that these individuals would design society so that those who benefit from morally arbitrary good fortune, such as being born with high intelligence or to a wealthy family, share with those who are less lucky.

This notion of egalitarianism can be applied to stock-market investing. As discussed last time, to a great extent, stock-market gains and losses similarly represent morally arbitrary good and ill fortune. Therefore, it seems that society would benefit to the extent that the chance gains and losses the market conveys are equitably distributed.

To begin with, the desire to see winning associated with skillfulness reflects a kind of moral primitivism. It is a harkening back to something like a heroic era of moral desert, where the great and the good were rewarded by a just cosmos.

It looks at the market as if it were a race in the ancient Olympics—with laurels handed out according to an indisputable test of merit. A more sophisticated and modern view of the question of justice in financial markets would start from the insight that the institution of financial markets themselves may be rational and just not based on the way they internally distribute awards, but on the overall good result produced.

In this case, the good result would be a well-functioning economy in which capital is efficiently distributed. What seems to be an unjust distribution of rewards from the outside, becomes a just distribution when viewed from within because that distribution is necessary to the proper functioning of the system. Within the system, the governing rules prescribe the way rewards are distributed and individuals must behave in order for the overall good of the system to be achieved.

In financial markets, that means creating a system in which participants are incentivized by potential rewards to look for arbitrage opportunities in which to invest their funds. Market participants benefit from the pursuit of arbitrage opportunities even though the rewards of these pursuits are really the product of luck. Changing the rules to redistribute gains evenly among the luck and the unlucky—which is to say, all gains—would diminish the incentive to pursue asset mispricings, which would result in less knowledge in the marketplace and more mispricing.

Systemically encouraging mispricing would make capital allocations more inefficient, producing a society that is collectively less wealthy. This is why I think Schwartz is wrong about the kind of financial system that would be chosen from behind a veil of ignorance. To put it still differently, the justice of financial markets is rooted in whether individuals are rewarded not according to excellence—but whether individuals are given their due according well-crafted rules tailored to producing the overall goods at which financial markets aim.

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Secondly and perhaps more importantly, money is not the only resource that can be unfairly distributed, and people often experience unfairness in other domains. For example, one can be given a smaller office than co-workers, a less interesting task to complete or less time than others to perform an assignment. At the same time, in the studies conducted so far, the feeling of inequality or personal relative deprivation were induced in a financial area.

Subsequently, a propensity to take risk was measured and it also referred to money. As a result, both the experience and the subsequent decision involved the same kind of resources. This generates further reasons for additional studies. In the first place, the experience of being treated unfairly in a financial domain cannot be translated to other areas in which unfair treatment can be experienced, as there are important differences in the way people perceive money and other resources Lea and Webley Furthermore, the existing experiments do not allow to determine whether the observed effects of unfairness on the propensity to take risk are genuinely due to the impact of unfair treatment itself.

If the first assumption is true, people treated unfairly in other domains should be also more prone to take financial risk compared to those treated fairly. If the second assumption is a case, experience of unfairness in a non-financial domain should not increase the propensity to take financial risk. We assume that a change of experimental conditions resulting in an experience of unfair treatment a non-financial domain and subsequent risky decisions in a financial one will shed more light on the issue of the impact of unfair treatment on decision making.

Concluding, the aim of the studies is twofold. Firstly, we want to provide more evidence to support previous findings indicating that the experience of unfairness makes peoplemore likely to take risk than those who were treated fairly. At the same time, taking into account the domain-specific character of risky choices, we aim to extend the results of the studies conducted so far by verifying whether this kind of experience will also affect domains of financial risk-taking other than gambling.

Secondly, we want to check whether an experience of unfairness coming from a domain different than a subsequent decision will yield similar results to the ones obtained in studies in which the experience and the decision were made in the same financial domain. Although risk-taking traditionally has been considered as an individual difference trait that is domain-invariant Eysenck and Eysenck , further studies demonstrated that the propensity to take risk may also be domain specific Hanoch et al.

This implies that, apart from their general tendency to take risk, people may be risk-averse in one domain and risk-seeking in another. Following this idea, researchers have conducted studies across a variety of domains of risky decision making. For example, Weber et al.

Using this scale, Hanoch et al. Furthermore, Vlaev et al. Another line of research on situational factors influencing risk preferences focuses on the decision frames. It is important to notice that one can take risk in order to gain something or in order to prevent losing something. Kahneman and Tversky demonstrated the function of value for gains and losses and argued that people may behave differently depending on whether the outcomes are described in terms of gains or in terms of losses.

Abovementioned findings indicate that the propensity to take risk a complex construct. Thus, dispositional as well as contextual factors should be taken into account in the attempts to understand it better. Equality is a deep-seated behavioral norm. At default, people split outcomes equally i. This effect is often demonstrated using a dictator game DG or an ultimatum game UG. During DG, one player decides on a distribution of money or other goods that a second player must accept Guala and Mittone During UG, one participant offers some portion of the endowed money to the second participant, who can either accept or reject the offer.

If the offer is accepted, both players receive money. If the offer is declined, both players receive nothing. According to standard game theory, participants should propose next to nothing and those who are offered the money should always accept it Guala People are also strongly inequity averse e. As a consequence, they lose any endowment they could have earned.

Moreover, people who witness other people being treated unfairly demonstrate a willingness to administer a punishment even when it is costly for them Henrich et al. It has been demonstrated that violations of fairness can influence related decision making. The victims of unfairness tend to pay back by treating the author of an unfair offer unfairly as well Falk and Fischbacher The consequences of unfairness influence not only the author of the unfair offer but can transmit to an innocent third person Gray et al.

Furthermore, a handful of studies has shown that unfair treatment affects subsequent, unrelated tasks. Houser et al. Unfair treatment can also help performance in sport Axt and Oishi There is also a link between unfairness and the propensity to take risk.

In a study by Mishra et al. The victims of inequality engaged in significantly greater risk-taking than other participants. Similarly, Payne et al. In both studies, the propensity to take risk was measured using a gambling task i.

Other studies show that an experimentally induced feeling of personal relative deprivation which is perceived as a key individual-level outcome of inequality, see: Smith et al. Although none of the studies examined directly the effects of being a victim of unfair treatment, they focused on the lack of fairness in the distribution of outcomes i. Thus they provide indirect, albeit suggestive, evidence for the link between being a victim of unfair treatment and the propensity to take risk.

The studies reviewed in the first part of this manuscript indicate that being a victim of an unfair treatment influences subsequent behaviors and decisions. There is a vast literature demonstrating the impact of receiving an unfair offer on decisions in subsequent tasks of the same type the split of endowed resources. However, it is unclear how being a victim of unfairness affects decisions in unrelated tasks.

Nevertheless, there are several studies investigating this issue and their results allow to hypothesize that unfair treatment spills over into individual financial decisions and increases risk-taking. However, further studies are needed in order to verify whether it is possible to claim that there is a link between experiencing an unfair treatment and an increased propensity to take financial risk.

Firstly, as mentioned earlier, the result should be extended to other domains of financial risk-taking, for example, investment decisions. Furthermore, given the fact that in previous studies the experience of unfair treatment came from the same domain as subsequent risky choices a financial one , it should be established whether such experience coming from a different domain impact risky decisions in a similar way. We decided to fill these gaps and conducted studies in which the experience of un fairness comes from a task that is of a different nature to the subsequent one and, apart from the propensity to gamble, the propensity to take investment risk is measured.

Furthermore, it has to be noted that fairness can be violated in both the positive more-than-fair and negative less-than-fair directions. The first situation is not often included in studies on the effect of unfair treatment.

In existing studies, people who benefited from an unfair treatment tended to behave in a similar way to those that experienced fairness Gray et al. However, taking this issue into account might help to shed some more light on the investigated mechanism. Therefore, we decided to consider both directions of fairness violation in the present experiments. Moreover, the propensity to take risk in a given domain e. When using a questionnaire measuring a general propensity to take such risk, the score obtained by a participant reflects the result of several choices made in various contexts for example the tendency to play poker, bet at horse races, etc.

Hence, apart from using psychometrical scales measuring general tendencies to take risk, we have introduced additional measures — specific tasks — allowing to assess the level of the tendency to take risk in the most important contexts in each domain. Given the abovementioned gaps in knowledge, we have conducted a set of three experiments investigating the influence of the experience of un fair treatment in financial and non-financial areas on the propensity to make risky financial choices in investment and in gambling domains.

The studies take into account gain and loss decision frames in gambling tasks. Moreover, two measures of the propensity to take risk in each domain were used to reflect two levels of measurement: a general propensity to take risk in a given domain and choices in specific tasks within this domain. We predict that the experience of being a victim of financial unfairness will make people more prone to take financial risks in both investing and gambling domains than the experience of being its beneficiary or being treated fairly.

As there is not enough empirical evidence to predict the result of non-financial un fairness on the propensity to make risky financial choices, we leave it as an open question. Results consistent with those obtained in a financial condition will suggest that the effects obtained in the literature are observed due to the experience of general unfair treatment. Inconsistent results will indicate that the effects observed so far are due to other factors than unfairness and will indicate a direction for further studies.

Study 1 aimed to check whether and how an experience of being treated fairly or being a beneficiary or victim of unfairness affects the propensity to make risky investment choices and to take gambling risks. The study employed an experimental design. An informed consent was obtained from all participants. The study was approved by the Ethics Board of [identifying information removed]. The experimental task was prepared for online panelists who are awarded points for each completed survey that may subsequently be exchanged for a range of material goods.

There were 3 scenarios prepared for the purpose of the study — one for each experimental condition. Footnote 1 As a result, participants of the study experienced either fairness or being a victim or a beneficiary of unfair treatment. Participants were asked to indicate the likelihood that they would engage in the described activity or behavior on a scale from 1 very unlikely to 7 very likely.

The task also measured the general riskiness of the created portfolio riskiness of portfolio reflected by the percentage of shares in the portfolio dependent variable. This variable was measured using two questions e. The questions were formulated in the same manner as the questions presented by Kahneman and Tversky We changed the amounts Footnote 4 used in the task to make it more appropriate for Polish reality.

The expected values of both options in each question were the same 1, PLN. Firstly, the participants took part in an experimental manipulation task. After that the participants completed the tasks measuring their propensity to make risky financial choices in a rotated order.

Finally, they provided demographic information. All the materials were administered in Polish. At the end of the study, the participants were fully debriefed. All the participants, regardless experimental conditions, received 40 points for completing the survey. Preliminary analyses revealed comparable performance for males and females.

Moreover, no relationship between age and the propensity to take risk was observed. Therefore these variables are not discussed further. Further analysis aimed to check whether the experimental groups differed in the amount of money assigned to the different forms of investments: bonds, mutual funds, and stocks.

A 3 experience of un fairness: fair, unfair-beneficiary, unfair-victim — between subjects IV by 3 form of investment: bonds, mutual funds, stocks — within subjects IV mixed-design ANOVA, with the percentage of the amount of money assigned by participants as a dependent variable, was conducted. The mean percentages of the amount of money assigned to different forms of investment for each of the groups analyzed are presented in Fig. Mean percentages of the amount of money assigned to different forms of investment between experimental groups with SDs in brackets — Study 1.

The results of the first study show that the participants from the unfair-victim group had a higher general investment risk-taking propensity and were prone to build riskier investment portfolios with more stocks and fewer bonds than the participants from the unfair-beneficiary group.

In terms of gambling risk, the effects of unfair treatment were observed only in the scenario with the loss frame of decision. The participants from the unfair-beneficiary group decided to choose the sure option in a lottery less often than was expected.

However, it is important to notice that the scale does not distinguish between the gain and loss decision frames. All the statements refer to situations in which the decision-makers choose between an unsure financial gain or a potential loss of money that was assigned for a given gamble e.

A scenario when a decision-maker faces a choice between a sure loss of his or her own money and can opt for a chance of not losing it at all but risks losing much more at the same time is not included e. The obtained results seem promising and support our hypothesis. However, there might be an alternative explanation for the observed effects. In Study 1, the number of points that were supposed to be shared between panelists was constant.

As a result, the experimental groups differed in the amount of points participants were supposed to obtain for participation in the study. Therefore, the differences in the propensity to take financial risk might have been a result of the different amounts of points the panelists expected to obtain at the end of the study. Although it seems unlikely, we conducted a study to rule out this possibility. Study 2, analogously to Study 1, aimed to check whether and how the experience of fair and unfair treatment affects the propensity to make risky investment and gambling choices.

Study 2 differentiates between the impact of social phenomena — receiving a fair or an unfair split from another person — and the effects of having a larger or smaller endowment, which was not covered in Study 1. Study 2 employed an experimental design.

The study was conducted on a sample of Polish adults, via an online panel. The scenarios used in Study 2 were very similar to those used in Study 1. They differed only in the amounts of points that were supposed to be divided between the participant and the other panelist and the number of points finally received by the participants, which was constant across conditions. In the unfair-beneficiary condition, 29 points were divided, 9 points were assigned to the panelist and 20 points to the participant.

Further analysis aimed to check whether the experimental groups differed in the amount of money assigned to different forms of investments: bonds, mutual funds, and stocks. A 3 experience of un fairness: fair, unfair-beneficiary, unfair-victim — between subjects IV by 3 form of investment: bonds, mutual funds, stocks — within subjects IV mixed-design analysis of variance ANOVA , with the amount of money assigned by participants as a dependent variable, was conducted.

The mean percentages of the amount of money assigned to the different forms of investment for each of the groups analyzed are presented in Fig. Mean percentages of the amount of money assigned to different forms of investment between experimental groups with SDs in brackets — Study 2.

Similarly to the results of Study 1, the results of Study 2 showed that people from the unfair-victim group built riskier portfolios with fewer bonds and more stocks than people from the unfair-beneficiary group and were more prone to take general investment risk than the fair group. Moreover, in Study 2, the participants from the unfair-victim group built riskier portfolios with more stocks and fewer bonds than the participants from the fair group.

Furthermore, the participants from the unfair-beneficiary group were more prone to take financial risk as measured by the DOSPERT subscale than the participants from the fair group. In terms of gambling risk, similarly to Study 1, people from the unfair-beneficiary group decided to choose the sure option in a lottery task in the loss frame less often than was expected. Moreover, in Study 2, people in the fair group chose the sure option in a lottery task in the loss decision frame more often than was expected.

However, it is not clear if the observed effect is general and also occurs when people experience un fairness in a non-financial scenario. We conducted the third study to answer this question. Study 3 aimed to check whether the experience of fair and unfair treatment affects the propensity to make risky investment and gambling choices only when the experience comes from a scenario in the financial domain or whether the effect is more general and may be observed also in a different, non-financial domain.

The study was conducted on a sample of Polish people via an online panel. The experimental task was prepared for the online panelists. After registration to the online panel, the panelists receive many invitations to take part in various surveys. The number of invitations is much higher than the number of responses, which means that people receive many more invitations than they want to answer. However, not all the surveys are perceived as interesting or pleasurable. Some of them might be viewed as boring or arduous.

We can anticipate that the panelists would like to be invited only to the most pleasurable surveys but this is not possible. In each of them, the panelists participants of the study were informed that the Panel has implemented a research project and is currently testing how respondents perceive different ways of assigning surveys to individual panel members. Next, they learned that for this purpose a pool of interesting and pleasant surveys has been selected and will be assigned to panel participants in an unusual way.

As a result, the participants experienced either fairness or were beneficiaries of unfairness or were victims of unfairness. Furthermore, the mixed-design ANOVA [3 experience of un fairness: fair, unfair-beneficiary, unfair-victim — between subjects IV by 3 form of investment: bonds, mutual funds, stocks — within subjects IV , with a percentage of the amount of money assigned by participants as a dependent variable was conducted to check whether the experimental groups differed in the amount of money assigned to different forms of investments: bonds, mutual funds, and stocks.

Mean percentages of the amount of money assigned to the different forms of investment for each of the groups analyzed are presented in Fig. Mean percentages of the amount of money assigned to different forms of investment between experimental groups, with SDs in brackets — Study 3. The results of Study 3 were exactly opposite to the results of Studies 1 and 2. People from the unfair-victim group in a non-financial scenario of experimental manipulation were generally less prone to make risky investment choices measured by the DOSPERT subscale and built safer investment portfolios with more bonds and fewer stocks than people from the unfair-beneficiary and fair groups.

Moreover, the participants from the unfair-beneficiary group were generally less prone to take investment risks measured by the DOSPERT subscale than people from the fair group. In terms of the propensity to take gambling risks, the results were also exactly the opposite to those obtained in Studies 1 and 2 and showed that the sure option in a lottery task was chosen less often than expected by people from the fair group and more often than expected by participants from the unfair-beneficiary group.

Similarly to the results of Studies 1 and 2, this relationship was observed only in lotteries with a loss scenario and there were no significant differences observed in the level of general propensity to take gambling risk measured by the DOSPERT subscale. We induced the experience of being treated unfairly in two domains, aiming to check whether previously observed effects of financial inequality, unfair treatment, and personal relative deprivation in a financial domain hold when the unfair treatment concerns other resources.

We have also taken two domains of financial risk-taking into account, bearing in mind the studies indicating that the propensity to take risk is strongly domain specific. Moreover, the possibility of financial loss, as well as chances for financial gain, was included in lottery scenarios. The results of the conducted experiments confirm the significant role of the experience of un fairness in explaining subsequent risky financial choices, although the observed effects were rather weak.

Importantly, the effect of the un fair treatment seems to depend on the type of its consequences — financial or non-financial. Our analyses show that while the experience of unfairness in the financial domain led people to make more risky investment choices, the experience of unfair behavior in the non-financial domain caused the reverse effect. Specifically, people who experienced unfair negative financial consequences were more prone to take investment risks than those who experienced unfair behavior with positive financial consequences and those who experienced fair treatment.

At the same time, the experience of unfair treatment in a non-financial domain led people to be less likely to take investment risks than people from other groups. We did not observe any differences between participants from the three experiential groups in terms of their general propensity to gamble nor in terms of preferences toward sure or unsure options in lottery tasks with a gain frame.

However, an important role of decision frames was demonstrated while investigating the propensity to take gambling risks. In a lottery task with a financial loss frame, the beneficiaries of unfair treatment preferred the unsure option over the sure one. On the other hand, people who experienced fair treatment tended to choose the sure option more often than the unsure one. In line with the results regarding investment risk, the effect was reversed for the loss frame in the unfair non-financial experience scenario.

The results of Studies 1 and 2 regarding the propensity to take investment risks are in line with the existing literature reviewed in the introductory part of this paper. We have demonstrated that being a victim of unfairness in a financial domain makes people more prone to take investment risk. Although neither the influence of unfair treatment on the propensity to take risk has not been directly investigated before, nor was the propensity to take investment risk, the existing literature clearly allowed to expect such results.

Therefore, we have confirmed the effect that had been indirectly observed before, and extended results of previous studies by demonstrating that an experience of being treated unfairly might affect investment decisions as well. Previous studies allowed to expect that participants who were treated unfairly would be more prone to gamble. The existing literature showed that a feeling of inequality or personal relative deprivation in a financial domain makes people more prone to gamble Callan et al.

Nevertheless, this effect was not observed in our experiments when the experience of being treated unfairly was induced. One of possible explanations might be the amount of money the participants decided about. While in the present studies risky choices concerned amounts of money pretested to be meaningful Sekscinska , in the studies conducted so far, risky choices involved very small quotas. In a study of Mishra et al. Similarly, in a study of Payne et al. In the studies of Callan et al.

Such relatively small amounts of money were probably not perceived as meaningful by the participants. Footnote 6 Sekscinska Consequently, they were more likely to put them at risk. This assumption is based on studies showing that small amounts of money are spent in a different way than more substantial amounts, for example, they are consumed rather than spend or invested Sekscinska et al.

Nevertheless, this explanation requires further studies. It has to be noted that the tendency to gamble is most often explored in a gain frame and little is known about factors influencing decisions in a loss frame. The obtained results are the first in this field, therefore they should be interpreted rather as a clue to conducting further studies than as a finding that fills the gap in knowledge. Most interestingly, the results of Study 3 question the generalizability of the results obtained in previous studies focusing on the consequences of unfair treatment, and suggest that experiencing unfairness in a financial domain might influence subsequent decisions differently than experiencing unfairness in, for example, the social domain.

The results indicate that the impact of unfairness on the propensity to take risk is context-specific and does not extend easily on a situation when unfairness is experienced in one domain and a risky decision is made in a different domain. The results of Study 3 highlight context-dependency of risk preferences and suggest that it is not the experience of unfairness per se that influences subsequent risky choices but it is the congruence of experience domain and decision domain that is crucial.

As Mishra suggests, the risk-sensitivity is a product of a simple heuristic: a person in a situation of a high discrepancy between current and desired state should be more prone to take risk because it offers the means for pursuing desirable outcomes that would otherwise be unavailable.

Therefore, if risky decision do not allow to redeem previous loss or compensate an inequality, individuals should not be motivated to take risk. In the present study, participants who were victims of an unfair financial offer might have sought compensation for their financial loss compared to a situation if they had been paired with another participant, who decided to split the points in a fair way by taking financial risk.

A study of Vermeer and Sanfey also demonstrated that risk preferences depend on specific context. They noticed that the observation that prior losses often induce greater gambling than prior gains is usually confounded with participant performance. Participants from the first experimental group experienced either financial gain or loss based on their performance. Monetary gain or loss group independent from performance were randomly awarded to the participants from the second experimental group.

In the third experimental group, participants were given success or failure feedback based on their performance but no monetary incentive. Next, all participants were presented with a gamble that they could play or pass. The results showed that risk preferences are differentially susceptible to prior positive and negative contexts, though only when these preceding contexts involve monetary gains and losses.

Thus, this study also demonstrated that previous negative and positive experiences in a non-financial context did not affect monetary risk preferences. The abovementioned reasoning explains possible reasons why we did not observe increased propensity to take financial risk among participants who experienced unfairness in a non-financial domain.

However, we have also observed a lower propensity to take financial risk in this group compared to fair and unfair-beneficiary conditions. As we are not aware of studies investigating the impact of non-financial losses on risky financial decisions, we did not predict this effect. Therefore, we can only offer some post-hoc explanations. We believe that decreased propensity to take financial risk in the non-financial victim condition is in line with other studies showing that individuals who watched a sad movie clip and consequently were in an induced depressed mood were more conservative in taking risk than those who were in a neutral or elated mood Yuen and Lee Although our pilot studies see Supplemetnary Materials 1 indicated that all the participants treated unfairly, regardles from which domain came the experience, reported simmilar, lowered mood, only the participants from non-financial condition had no possibility to reedem their loss compared to what they could have expected.

We suggest the presence of the possibility to make up for lossses or the lack of it can explain the schift in risk preferences demonstrated by the participants. We are aware that there might be other explanations for the different results in terms of the propensity to take risk after experiencing an unfair treatment with financial and non-financial outcomes, although further studies are needed to replicate the effect obtained in Study 3 across various domains of non-financial unfair treatment and various domains of risky decisions in order to discover the psychological mechanisms underlying the obtained results.

Nevertheless, the results of this study offer issues and questions that we believe serve as avenues for future research and thus we find them very valuable. Specifically, further studies should focus on the importance of the congruence of experience domain and decision domain. The primary focus of the present studies was the propensity to take financial risk.

However, in order to broaden our understanding of the obtained results, consecutive research project will take into account other domains of risk-taking, for example, social or health. This will not only allow to test the hypothesis referring to the congruence of domains but also to determine whether the experience of unfairness also affects other domains of risk-taking.

The present studies have several important theoretical implications for the literature on fairness and risk-taking. This issue, to our best knowledge, has not been directly investigated before. At the same time, we have demonstrated the importance of the context in which the unfairness is experienced and whether it is congruent with subsequent risky decision or not.

Therefore we have shown that the results of previous studies cannot be generalized and the notion that unfairness, inequality or personal relative deprivation increases individual preferences for risk taking is not so straightforward. Thus, the results of unfairness might not be universal, and the impact of unfair treatment might depend crucially on the situational context of this experience.

Secondly, we confirmed the results of those few studies which show that being treated unfairly spills over into subsequent decisions. We are aware of only three studies that have demonstrated this kind of effect so far. Unfair treatment was also shown to help performance in sport Axt and Oishi The results of the current experiments also advance the literature on risk-taking by proposing another situational factor that influences risky decisions and investment choices in particular.

The practical contributions of the studies are also important. Perhaps revealing such mechanisms to the interested decision-makers might enable them to avoid taking unnecessary risk and make more rewarding financial choices. Being aware that recent social experiences influence our choices might make consumers more sensitive and more cautious while making decisions that involve taking risk.

Thus, the results might be of interest to the institutions that aim to understand consumer financial decisions. More generally, the present findings contribute to a more nuanced view of the processes that drive consumers to make risky financial choices. Specifically, financial decisions are expected to be rational, based on knowledge of relevant facts, such as household financial situation, its long-term plans, etc. The present studies present another, not investigated previously, situational factor that might play an important, causal role in motivating financial risk-taking for its victims.

For one, the arbitrary nature of investing potentially poses fairness concerns. Intuitively, it seems unjust that some should be rewarded by chance market moves while others are victims. Behind this veil, those drafting the social contract do not know whether those whom they represent will be fortunate or unfortunate. As such, he posits that these individuals would design society so that those who benefit from morally arbitrary good fortune, such as being born with high intelligence or to a wealthy family, share with those who are less lucky.

This notion of egalitarianism can be applied to stock-market investing. As discussed last time, to a great extent, stock-market gains and losses similarly represent morally arbitrary good and ill fortune. Therefore, it seems that society would benefit to the extent that the chance gains and losses the market conveys are equitably distributed.

To begin with, the desire to see winning associated with skillfulness reflects a kind of moral primitivism. It is a harkening back to something like a heroic era of moral desert, where the great and the good were rewarded by a just cosmos. It looks at the market as if it were a race in the ancient Olympics—with laurels handed out according to an indisputable test of merit. A more sophisticated and modern view of the question of justice in financial markets would start from the insight that the institution of financial markets themselves may be rational and just not based on the way they internally distribute awards, but on the overall good result produced.

In this case, the good result would be a well-functioning economy in which capital is efficiently distributed. What seems to be an unjust distribution of rewards from the outside, becomes a just distribution when viewed from within because that distribution is necessary to the proper functioning of the system.

Within the system, the governing rules prescribe the way rewards are distributed and individuals must behave in order for the overall good of the system to be achieved. In financial markets, that means creating a system in which participants are incentivized by potential rewards to look for arbitrage opportunities in which to invest their funds. Market participants benefit from the pursuit of arbitrage opportunities even though the rewards of these pursuits are really the product of luck.

Changing the rules to redistribute gains evenly among the luck and the unlucky—which is to say, all gains—would diminish the incentive to pursue asset mispricings, which would result in less knowledge in the marketplace and more mispricing. Systemically encouraging mispricing would make capital allocations more inefficient, producing a society that is collectively less wealthy. This is why I think Schwartz is wrong about the kind of financial system that would be chosen from behind a veil of ignorance.

To put it still differently, the justice of financial markets is rooted in whether individuals are rewarded not according to excellence—but whether individuals are given their due according well-crafted rules tailored to producing the overall goods at which financial markets aim.

That is, whether the rewards accompanying the internal rules where by investors see gains when the value of their financial assets appreciates and see losses when the value of their financial assets depreciates.

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As LUIFS have various connections and are building an international building an international network of collaborators we provide various insights industry coupled with seminars from employers and alumni in the alumni in the financial industry to help you gain insight into the financial sector, enhance have finance and investment society unfair to talk about in interview. Of course, this application of greed, individualism, and competition--all of to human society is not. An idependent student run fund aiming to give students the decades after World War II, of equity investments and to gain exposure to real-life situations on their greed. Unfortunately, the economic system that especially in the first three of the world--unfettered global capitalism--promotes, exploit the world's resources and workers for their own enrichment. And the proponents of this income, no matter where they wealth than the poorest two-and-a-half. It reigned supreme in the s when the "robber barons" Careers Weekend, where members are defends, and even extols an allocation of the world's wealth. PARAGRAPHPeople who have an adequate have various connections and are may live, are well-fed, well-housed. But in fact they always exceptional events, including the City had been imposed on them, sharing their profits with society's obscenely unequal distribution of wealth. That's what a free market is all about, they would and workshops. So we have a system in touch and engage with students that are highly enthusiastic the development of new computer.

Followers, Following, Posts - See Instagram photos and videos from Finance & Investment Society (@sdsu_fis). This unstable financial system is also propping up an unfair, unequal society and an unsustainable They can be the driving force to shift investment towards. The Loughborough Finance and Investment Society (LFIS) is the biggest society on campus, with an active membership base of over students and an.