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Social comparison and risk taking behavior

  • Astrid Gamba
  • Elena Manzoni

We study theoretically and experimentally decision making under uncertainty in a social environment. We introduce an interdependent preferences model that assumes that the decision maker evaluates monetary outcomes in relation both with his individual and his social reference point. In the experiment we reproduce a workplace environment whereby subjects interact in an e ffort task, earn (possibly) diff erent wages from this task and then undertake a risky decision that may give them an extra bonus. Controlling for intrinsic risk attitudes, we find that both downward and upward social comparison strongly influence risk attitudes and that they both generate more risk loving behavior. Moreover, we fi nd that a propension to envy counterposes such eff ect, by increasing risk aversion.

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File URL: http://dipeco.economia.unimib.it/repec/pdf/mibwpaper266.pdf
File Function: First version, 2014
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Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 266.

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Length: 47
Date of creation: Jan 2014
Date of revision: Jan 2014
Handle: RePEc:mib:wpaper:266
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