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Social comparison and risky choices

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  • Jona Linde

    ()

  • Joep Sonnemans

Abstract

This discussion paper has led to a publication in 'Journal of Risk and Uncertainty' , 44(1), 45-72. This study attempts to combine two traditional fields in microeconomics: individual decision making under risk and decision making in an interpersonal context. The influence of social comparison on risky choices is explored in an experiment in which participants make a series of choices between lotteries with only positive outcomes. Three kinds of choice situations are employed. In the loss and gain context the social referent receives a fixed payoff that is respectively higher and lower than all possible payoffs of the decision maker. In the neutral context social referent and decision maker will always earn the same amount. In the gain and loss contexts the decision maker has no influence on the earnings of the social referent so strategic behavior or social preferences can play no role. We find that decision makers are more risk-averse in the loss context than in the gain context, with the behavior in the neutral context in between. This result is in opposition to the predictions of prospect theory extrapolated to a social context.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 44 (2012)
Issue (Month): 1 (February)
Pages: 45-72

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Handle: RePEc:kap:jrisku:v:44:y:2012:i:1:p:45-72

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Web page: http://www.springerlink.com/link.asp?id=100299

Related research

Keywords: Decision making under risk; Reflection effect; Social comparison; Social preferences; Experiment; C91; D81; D03;

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References

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Citations

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Cited by:
  1. Alexia Gaudeul, 2013. "Social preferences under uncertainty," Jena Economic Research Papers 2013-024, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  2. van Veldhuizen, Roel, 2013. "The influence of wages on public officials' corruptibility: A laboratory investigation," Discussion Papers, Research Unit: Market Behavior SP II 2013-210, Social Science Research Center Berlin (WZB).
  3. Roel van Veldhuizen, 2012. "The Influence of Wages on Public Officials' Corruptibility: A Laboratory Investigation," Tinbergen Institute Discussion Papers 12-038/1, Tinbergen Institute.
  4. Andreas Richter & Jörg Schiller & Harris Schlesinger, 2014. "Behavioral insurance: Theory and experiments," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 85-96, April.
  5. repec:dgr:uvatin:2012038 is not listed on IDEAS
  6. 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.
  7. Amrei M. Lahno & Marta Serra-Garcia, 2012. "Peer Effects in Risk Taking," CESifo Working Paper Series 4057, CESifo Group Munich.
  8. Astrid Gamba & Elena Manzoni, 2014. "Social comparison and risk taking behavior," Working Papers 266, University of Milano-Bicocca, Department of Economics, revised Jan 2014.
  9. Andersson, Ola & Holm, Håkan J. & Tyran, Jean-Robert & Wengström, Erik, 2013. "Deciding for Others Reduces Loss Aversion," Working Papers 2013:30, Lund University, Department of Economics.
  10. Valeria Faralla & Alessandro Innocenti & Eva Venturini, 2013. "Risk Taking and Social Exposure," Labsi Experimental Economics Laboratory University of Siena 046, University of Siena.
  11. Andreas Friedl & Katharina Lima de Miranda & Ulrich Schmidt, 2014. "Insurance demand and social comparison: An experimental analysis," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 97-109, April.
  12. Weinreich, Daniel, 2013. "The perception of distributive fairness and optimal taxation under uncertainty," MPRA Paper 48912, University Library of Munich, Germany.
  13. van Veldhuizen, R., 2013. "The influence of wages on public officials’ corruptibility: A laboratory investigation," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 341-356.

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