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Peer Effects in Risk Taking

  • Lahno, Amrei M.
  • Serra-Garcia, Marta
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    This paper examines the effect of peers on individual risk taking. In the absence of informational motives, we investigate why social utility concerns may drive peer effects. We test for two main channels: utility from payoff differences and from conforming to the peer. We show experimentally that social utility generates substantial peer effects in risk taking. These are mainly explained by utility from payoff differences, in line with outcomebased social preferences. Contrary to standard assumptions, we show that estimated social preference parameters change significantly when peers make active choices, compared to when lotteries are randomly assigned to them.

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    Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 14309.

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    Date of creation: Dec 2012
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    Handle: RePEc:lmu:muenec:14309
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