Sharing or gambling? On risk attitudes in social contexts

Decisions under risk are often embedded in a social context that we usually abstract from when studying decision-making in the laboratory. In contrast to that practice, our experiment investigates whether risk-taking is affected by social comparisons. In particular, we focus on situations where some amount of money has to be allocated to two parties: either the amount can be shared, or a random device allocates the entire amount to one of the parties. We find that the social context of the decision matters strongly: When participants are in a disadvantageous initial position compared to the other party, they select the risky option much more often than in a purely individual decision, identical in all other respects. Overall, we find that individuals are relatively more risk-seeking in the socially unfavorable domain than in isolation, in contrast to the favorable one, where we find no or little change in elicited risk attitudes in comparison to an isolated decision.