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Risk-taking and others

Author

Listed:
  • Annika Lindskog

    (University of Gothenburg)

  • Peter Martinsson

    (University of Gothenburg
    Technical University of Denmark)

  • Haileselassie Medhin

    (World Resource Institute)

Abstract

Real-life risk decisions are taken in a social context. However, we still know little about how that affects risk decisions. We have experimentally investigated the effect of social comparison on risk taking. We designed an experiment that allows us to isolate social comparison from other channels whereby the social context can affect risk decisions. The design also allows us to find impacts of the social reference point both if the individual cares about the distance to the social reference point and if she cares about her rank. Thus, we compare risk-taking in isolation to risk-taking with various exogenously imposed social reference points. We find that risk-taking is affected by the desire to get ahead of others, both when the social reference point is within reach (rank can be affected) and when it is out of reach (rank cannot be affected). Our results suggest that people do not only care about rank but also care about the distance to the social reference point.

Suggested Citation

  • Annika Lindskog & Peter Martinsson & Haileselassie Medhin, 2022. "Risk-taking and others," Journal of Risk and Uncertainty, Springer, vol. 64(3), pages 287-307, June.
    • Handle: RePEc:kap:jrisku:v:64:y:2022:i:3:d:10.1007_s11166-022-09376-x
    DOI: 10.1007/s11166-022-09376-x
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    References listed on IDEAS

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    More about this item

    Keywords

    Risk; Social reference point; Status; Envy; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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