Peer Effects in Risk Aversion
AbstractUsing data on Uruguayan adolescents, we estimate peer effects in risk attitudes. Relative risk aversion is elicited in an experimental setting. Identification is based on parents not being able to choose the class within the school of their choice. After controlling for school-grade fixed effect and addressing endogeneity due to simultaneity, we find a significant and quantitative large impact of peers on individuals risk aversion. An increase in one standard deviation of the group risk aversion produces an increase in 44-64% on an individual risk aversion. These findings enhance the importance of multiplicative effects related to risk behavior.
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Bibliographic InfoPaper provided by Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. in its series Documentos de Trabajo/Working Papers with number 1205.
Date of creation: 2012
Date of revision:
risk aversion; peer effects; instrumental variables;
Other versions of this item:
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- D1 - Microeconomics - - Household Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-20 (All new papers)
- NEP-EXP-2012-10-20 (Experimental Economics)
- NEP-NET-2012-10-20 (Network Economics)
- NEP-UPT-2012-10-20 (Utility Models & Prospect Theory)
- NEP-URE-2012-10-20 (Urban & Real Estate Economics)
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