Imitation and Luck: An Experimental Study on Social Sampling

In this paper, we present the results of two experiments on social sampling. In both experiments, people are asked to make a risky decision in a situation where an idiosyncratic luck term a?ects their performance. Before they make their decision, people have the opportunity to sample others who have done exactly the same problem before them. These previous participants are ranked on the basis of their success. In the first experiment, we find that, by and large, subjects sample and imitate lucky risk seekers, while they could have sampled others to retrieve information that is valuable to solve their problem rationally. The simple behavioral rule of imitating the best appears to be robust to the setting of the problem. In the second experiment, we find that subjects tend to imitate successful others in both the winner's curse version and the loser's curse version of the Bazerman-Samuelson takeover game. Because of the way these problems are constructed, imitation exacerbates the winner's curse while it alleviates the loser's curse. In all problems, social sampling makes people look more risk seeking than the people who do not have the opportunity to sample.