Negativity bias, which drives both loss aversion and the certainty effect in prospect theory, shapes risk-taking behavior. As negativity bias diminishes with age, a positivity effect emerges, creating countervailing influences on decision-making by amplifying the certainty effect while reducing loss aversion. This raises important questions about how age impacts risk-taking among older CEOs, a growing demographic in executive leadership. To address this, we conducted an experimental study of Danish CEOs to examine how age influences these factors in investment decisions and found support for the positivity effect of age hypothesis. Older CEOs are more likely to favor the safe choice of not investing, a tendency mitigated by reduced loss sensitivity. The positivity effect of age also manifests in information search. Additionally, the age-related decline in risk-taking is driven by the certainty effect rather than risk aversion, as no significant age differences were observed in risk propensity in lottery tasks.
