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Risk-taking in social settings: Group and peer effects

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  • Bougheas, Spiros
  • Nieboer, Jeroen
  • Sefton, Martin

Abstract

We investigate experimentally the effect of consultation (unincentivized advice) on choices under risk in an incentivized investment task. We compare consultation to two benchmark treatments: one with isolated individual choices, and a second with group choice after communication. Our benchmark treatments replicate findings that groups take more risk than individuals in the investment task; content analysis of group discussions reveals that higher risk-taking in groups is positively correlated with mentions of expected value. In our consultation treatments, we find evidence of peer effects: decisions within the peer group are significantly correlated. However, average risk-taking after consultation is not significantly different from isolated individual choices. We also find that risk-taking after consultation is not affected by adding a feedback stage in which subjects see the choices of their consultation peers.

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Bibliographic Info

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

Volume (Year): 92 (2013)
Issue (Month): C ()
Pages: 273-283

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Handle: RePEc:eee:jeborg:v:92:y:2013:i:c:p:273-283

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Web page: http://www.elsevier.com/locate/jebo

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Keywords: Experimental economics; Choice under risk; Advice; Social influence; Peer effects;

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Cited by:
  1. Jeroen Nieboer, 2013. "Risk taking in diverse groups: Gender matters," Discussion Papers 2013-06, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Alexia Delfino & Luigi Marengo & Matteo Ploner, 2013. "I Did it Your Way. An Experimental Investigation of Peer Effects in Investment Choices," CEEL Working Papers 1305, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  3. Spiros Bougheas & Jeroen Nieboerr & Martin Sefton, . "Risk Taking and Information Aggregation in Groups," Discussion Papers 2014-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

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