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Authors

David Herrera

Abstract

Existing literature suggests that an individual's socioeconomic status may have a considerable effect on their tendency to engage in financially risky behaviors. More specifically, studies have demonstrated that victims of inequality, that is, people of low socioeconomic status or whose financial disadvantage is salient, have an increased propensity to make risky decisions. This notion, however, does not apply to all cases of economic inequality, but rather depends on the process through which income is acquired. Thus, this research attempts to challenge the current notion by varying the fairness of the process through which income is earned or given, attempting to more accurately simulate the earning of income in the real world. I hypothesize that using a "fairer" process to determine monetary distribution will curtail the risky behaviors supposedly caused by economic inequality, as opposed to a random or arbitrary (unfair) process. I also seek to determine if perceived procedural fairness can influence one's willingness to take financial risks. In situations of inequality, I find no considerable effect of distribution fairness on subsequent levels of risk involved in financial decisions.

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