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Volkswirtschaft - Open Access LMU - Teil 03/03 Podcast
Peer Effects in Risk Taking

Peer Effects in Risk Taking

Volkswirtschaft - Open Access LMU - Teil 03/03 vor 13 Jahren

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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.