Relative standing comparisons, risk taking, and safety regulations

Konrad, Kai A. und Lommerud, Kjell Erik (1993): Relative standing comparisons, risk taking, and safety regulations. In: Journal of Public Economics, Vol. 51, No. 3: pp. 345-358

Abstract

We study the question of how relative standing comparisons, or 'status seeking', influence risk taking. When utility is separable in consumption and status the following results apply. With non-systematic risks, more concern for status leads to more (less) risk taking when, in a sense made precise in the paper, the utility function is less (more) concave in status than in pure consumption. With systematic risk, risk taking always increases with the concern for status. However, status seeking always implies socially excessive risk taking, thus suggesting a role for public regulation of risky choices. © 1993.

• Item Type: Journal article
• Form of publication: Publisher's Version
• Faculties: Economics > Chairs > MPI for Tax Law and Public Finance
• Subjects: 300 Social sciences > 330 Economics
• ISSN: 0047-2727
• Language: English