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