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Social interaction effects: The impact of distributional preferences on risky choices

Author

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  • Anita Gantner

    (University of Innsbruck)

  • Rudolf Kerschbamer

    (University of Innsbruck)

Abstract

This paper identifies convex distributional preferences as a possible cause for the empirical observation that agents belonging to the same group tend to behave similarly in risky environments. We first show theoretically that convex distributional preferences imply social interaction effects in risky choices in the sense that observing a peer choose a risky (safe) option increases the agent’s incentive to choose the risky (safe) option as well, even when lotteries are stochastically independent and the agent can only observe the lottery chosen by the peer but not the corresponding outcome. We then confirm our theoretical predictions experimentally.

Suggested Citation

  • Anita Gantner & Rudolf Kerschbamer, 2018. "Social interaction effects: The impact of distributional preferences on risky choices," Journal of Risk and Uncertainty, Springer, vol. 56(2), pages 141-164, April.
    • Handle: RePEc:kap:jrisku:v:56:y:2018:i:2:d:10.1007_s11166-018-9275-5
    DOI: 10.1007/s11166-018-9275-5
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    Cited by:

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    2. Celse, Jeremy & Karakostas, Alexandros & Zizzo, Daniel John, 2023. "Relative risk taking and social curiosity," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 243-264.
    3. Paul Gortner & Joël van der Weele, "undated". "Peer Effects and Risk Sharing in Experimental Asset Markets," Tinbergen Institute Discussion Papers 19-027/I, Tinbergen Institute.
    4. Fabian Bopp & Sara le Roux, 2023. "Social learning under ambiguity - an experimental study," Working Papers Dissertations 110, Paderborn University, Faculty of Business Administration and Economics.
    5. Fabian Bopp & Wendelin Schnedler & Radovan Vadovic, 2023. "Conformism of the Minorities: Theory and Experiment," Working Papers Dissertations 108, Paderborn University, Faculty of Business Administration and Economics.
    6. Alexandros Karakostas & Giles Morgan & Daniel John Zizzo, 2023. "Socially interdependent risk taking," Theory and Decision, Springer, vol. 95(3), pages 365-378, October.
    7. Annika Lindskog & Peter Martinsson & Haileselassie Medhin, 2022. "Risk-taking and others," Journal of Risk and Uncertainty, Springer, vol. 64(3), pages 287-307, June.

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