Peer Effects in Risk Taking

Lahno, Amrei M. and Serra-Garcia, Marta (December 2012): Peer Effects in Risk Taking. Discussion Papers in Economics 2012-34

Abstract

This paper examines the effect of peers on individual risk taking. In the absence of informational motives, we investigate why social utility concerns may drive peer effects. We test for two main channels: utility from payoff differences and from conforming to the peer. We show experimentally that social utility generates substantial peer effects in risk taking. These are mainly explained by utility from payoff differences, in line with outcomebased social preferences. Contrary to standard assumptions, we show that estimated social preference parameters change significantly when peers make active choices, compared to when lotteries are randomly assigned to them.

• Item Type: Paper
• Keywords: Peer Effects, Decision Making under risk, Social Comparison, Social Preferences, Laboratory Experiment
• Faculties: Economics; Economics > Munich Discussion Papers in Economics
• Subjects: 300 Social sciences > 300 Social sciences, sociology and anthropology; 300 Social sciences > 330 Economics
• JEL Classification: C91, C92, D03, D83, G02
• Language: English

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