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Peer Effects in Risk Aversion


  • Néstor Gandelman

    () (Universidad ORT Uruguay)

  • Ana Balsa

    () (Universidad de Montevideo)

  • Nicolás González

    () (CEMFI)


Using 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.

Suggested Citation

  • Néstor Gandelman & Ana Balsa & Nicolás González, 2012. "Peer Effects in Risk Aversion," Development Research Working Paper Series 11/2012, Institute for Advanced Development Studies.
  • Handle: RePEc:adv:wpaper:201211

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    References listed on IDEAS

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    Cited by:

    1. Francesca Gioia, 2017. "Peer effects on risk behaviour: the importance of group identity," Experimental Economics, Springer;Economic Science Association, vol. 20(1), pages 100-129, March.

    More about this item


    Risk aversion; instrumental variables;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • D1 - Microeconomics - - Household Behavior


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