Advanced Search
MyIDEAS: Login

Reference groups and variable risk strategies

Contents:

Author Info

  • Knudsen, Thorbjørn
Registered author(s):

    Abstract

    The present article examines two important effects that have been given scant attention in prior studies of variable risk strategies. The first effect, reference group sensitivity, is the degree to which decision makers' aspirations are sensitive to their reference group. In this paper we compare the performances of decision makers with alternative levels of reference group sensitivity. Second, we introduce the novel concept of community effect. This relates to mobility among multiple segregated reference groups. The performance of decision makers residing in a world with one single population is compared with that of decision makers who have the possibility, which is more or less costly, to switch between multiple populations. The results support the findings from previous studies that variable risk strategies are preferred over fixed risk. The study of a community of populations provides additional insights that both support and complement previous research.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/B6V8F-4RR1NMF-2/1/f043f33619180b99acfa0b542149973c
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 66 (2008)
    Issue (Month): 1 (April)
    Pages: 22-36

    as in new window
    Handle: RePEc:eee:jeborg:v:66:y:2008:i:1:p:22-36

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/jebo

    Related research

    Keywords:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Claus C. Berg, 1974. "Individual Decisions Concerning the Allocation of Resources for Projects with Uncertain Consequences," Management Science, INFORMS, vol. 21(1), pages 98-105, September.
    2. Levinthal, Daniel & March, James G., 1981. "A model of adaptive organizational search," Journal of Economic Behavior & Organization, Elsevier, vol. 2(4), pages 307-333, December.
    3. James G. March & Zur Shapira, 1987. "Managerial Perspectives on Risk and Risk Taking," Management Science, INFORMS, vol. 33(11), pages 1404-1418, November.
    4. T. Borgers & R. Sarin, 2010. "Naïve Reinforcement Learning With Endogenous Aspirations," Levine's Working Paper Archive 381, David K. Levine.
    5. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
    6. John W. Payne & Dan J. Laughhunn & Roy Crum, 1980. "Translation of Gambles and Aspiration Level Effects in Risky Choice Behavior," Management Science, INFORMS, vol. 26(10), pages 1039-1060, October.
    7. John W. Payne & Dan J. Laughhunn & Roy Crum, 1981. "Note---Further Tests of Aspiration Level Effects in Risky Choice Behavior," Management Science, INFORMS, vol. 27(8), pages 953-958, August.
    8. M. Posch & A. Pichler & K. Sigmund, 1998. "The Efficiency of Adapting Aspiration Levels," Working Papers ir98103, International Institute for Applied Systems Analysis.
    9. R. Duncan Luce & Detlof von Winterfeldt, 1994. "What Common Ground Exists for Descriptive, Prescriptive, and Normative Utility Theories?," Management Science, INFORMS, vol. 40(2), pages 263-279, February.
    10. Gale, John & Binmore, Kenneth G. & Samuelson, Larry, 1995. "Learning to be imperfect: The ultimatum game," Games and Economic Behavior, Elsevier, vol. 8(1), pages 56-90.
    11. Theresa K. Lant, 1992. "Aspiration Level Adaptation: An Empirical Exploration," Management Science, INFORMS, vol. 38(5), pages 623-644, May.
    12. Herriott, Scott R & Levinthal, Daniel & March, James G, 1985. "Learning from Experience in Organizations," American Economic Review, American Economic Association, vol. 75(2), pages 298-302, May.
    13. Dosi, Giovanni, 1990. "Finance, innovation and industrial change," Journal of Economic Behavior & Organization, Elsevier, vol. 13(3), pages 299-319, June.
    14. Binmore, Ken & Samuelson, Larry, 1997. "Muddling Through: Noisy Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 74(2), pages 235-265, June.
    15. West, Patricia M & Broniarczyk, Susan M, 1998. " Integrating Multiple Opinions: The Role of Aspiration Level on Consumer Response to Critic Consensus," Journal of Consumer Research, University of Chicago Press, vol. 25(1), pages 38-51, June.
    16. March, James G., 1988. "Variable risk preferences and adaptive aspirations," Journal of Economic Behavior & Organization, Elsevier, vol. 9(1), pages 5-24, January.
    17. John Armour & Douglas Cumming, 2005. "Bankruptcy Law and Entrepreneurship," ESRC Centre for Business Research - Working Papers wp300, ESRC Centre for Business Research.
    18. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
    19. John W. Payne & Dan J. Laughhunn & Roy Crum, 1984. "Multiattribute Risky Choice Behavior: The Editing of Complex Prospects," Management Science, INFORMS, vol. 30(11), pages 1350-1361, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Safarzynska, Karolina & van den Bergh, Jeroen C.J.M., 2010. "Evolving power and environmental policy: Explaining institutional change with group selection," Ecological Economics, Elsevier, vol. 69(4), pages 743-752, February.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:66:y:2008:i:1:p:22-36. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.