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Relative risk taking and social curiosity

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  • Celse, Jeremy
  • Karakostas, Alexandros
  • Zizzo, Daniel John

Abstract

We present an experiment providing (a) a horse race among different models combining social preferences and risk preferences, and (b) a test of whether agents are socially curious, that is wanting to know about the risk taking of others and the outcomes of their risk taking. We distinguish outcome driven models (that is, models where agents care about the earning outcomes for themselves and others) from action driven models (that is, models where agents care about one's risk taking actions relative to the actions of others). We embed outcome and action driven competitive preferences, inequality aversion, conformism, and social loss aversion, within a single theoretical framework generalized from Bolton and Ockenfels (2000). We find that competitive preferences models best explain investment decisions in our setting, with almost 50% of subjects influenced both by their co-participants’ actions and outcomes. Social information is sought 90% of the times when it is free. When it is costly, it is sought 30% of the times if the information is instrumental for one's own investment decision and 10% to 20% of the times if it is not. Competitive preferences can help explain social curiosity.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:jeborg:v:210:y:2023:i:c:p:243-264
    DOI: 10.1016/j.jebo.2023.04.016
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    More about this item

    Keywords

    Risk; Curiosity; Peer effects; Social preferences; Competitive preferences; Social comparison;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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