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Social Comparison and Risky Choices

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  • Jona Linde

    ()
    (University of Amsterdam)

  • Joep Sonnemans

    ()
    (University of Amsterdam)

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.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 09-097/1.

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Date of creation: 11 Nov 2009
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Handle: RePEc:dgr:uvatin:20090097

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Web page: http://www.tinbergen.nl

Related research

Keywords: Social comparison; social preferences; decision making under risk; experiment;

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References

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Citations

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Cited by:
  1. 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).
  2. Lahno, Amrei M. & Serra-Garcia, Marta, 2012. "Peer Effects in Risk Taking," Discussion Papers in Economics 14309, University of Munich, Department of Economics.
  3. Andersson, Ola & Holm, Håkan J. & Tyran, Jean-Robert & Wengström, Erik, 2013. "Deciding for Others Reduces Loss Aversion," Working Paper Series 976, Research Institute of Industrial Economics.
  4. Astrid Gamba & Elena Manzoni, 2014. "Social comparison and risk taking behavior," Jena Economic Research Papers 2014-001, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Valeria Faralla & Alessandro Innocenti & Eva Venturini, 2013. "Risk Taking and Social Exposure," Labsi Experimental Economics Laboratory University of Siena 046, University of Siena.
  6. repec:dgr:uvatin:2012038 is not listed on IDEAS
  7. 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.
  8. Alexia Gaudeul, 2013. "Social preferences under uncertainty," Jena Economic Research Papers 2013-024, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  9. 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.
  10. Weinreich, Daniel, 2013. "The perception of distributive fairness and optimal taxation under uncertainty," MPRA Paper 48912, University Library of Munich, Germany.
  11. Roel van Veldhuizen, 2012. "The Influence of Wages on Public Officials' Corruptibility: A Laboratory Investigation," Tinbergen Institute Discussion Papers 12-038/1, Tinbergen Institute.

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