IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Risk Taking in Social Settings: Group and Peer Effects

  • Spiros Bougheas


    (School of Economics, University of Nottingham)

  • Jeroen Nieboer


    (School of Economics, University of Nottingham)

  • Martin Sefton


    (School of Economics, University of Nottingham)

We investigate experimentally the effect of consultation (unincentivized advice) on choices under risk in an incentivized investment task. We compare these choices to two benchmark treatments: one with isolated individual choices, and a second with group choice after communication. Our benchmarking treatments replicate earlier findings that groups take more risk than individuals in the investment task . In our consultation treatments we find evidence of peer effects: there is significant correlation of decisions within the peer group. However, average risk taking is not significantly different from the benchmark treatment with isolated individual choices. This latter result underlines the importance of payoff-commonality for bringing about higher risk-taking in groups.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2013-01.

in new window

Date of creation: Jan 2013
Date of revision:
Handle: RePEc:not:notcdx:2013-01
Contact details of provider: Postal:
School of Economics University of Nottingham University Park Nottingham NG7 2RD

Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Bicchieri, Cristina & Erte, Xiao, 2007. "Do the right thing: But only if others do so," MPRA Paper 4609, University Library of Munich, Germany.
  2. Leonardo Bursztyn & Florian Ederer & Bruno Ferman & Noam Yuchtman, 2012. "Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment," NBER Working Papers 18241, National Bureau of Economic Research, Inc.
  3. Bellemare, Charles & Lepage, Patrick & Shearer, Bruce S., 2009. "Peer Pressure, Incentives, and Gender: An Experimental Analysis of Motivation in the Workplace," IZA Discussion Papers 3948, Institute for the Study of Labor (IZA).
  4. Cooper, David J. & Rege, Mari, 2011. "Misery loves company: Social regret and social interaction effects in choices under risk and uncertainty," Games and Economic Behavior, Elsevier, vol. 73(1), pages 91-110, September.
  5. Falck, Oliver & Heblich, Stephan & Lüdemann, Elke, 2012. "Identity and entrepreneurship: Do school peers shape entrepreneurial intentions?," Munich Reprints in Economics 20633, University of Munich, Department of Economics.
  6. Eldad Yechiam & Meir Druyan & Eyal Ert, 2008. "Observing others' behavior and risk taking in decisions from experience," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3(7), pages 493-500, October.
  7. Timothy N. Cason & Vai-Lam Mui, 1998. "Social Influence in the Sequential Dictator Game," Monash Economics Working Papers archive-37, Monash University, Department of Economics.
  8. Krupka, Erin L. & Weber, Roberto A., 2008. "Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary?," IZA Discussion Papers 3860, Institute for the Study of Labor (IZA).
  9. Gary Charness & Edi Karni & Dan Levin, 2012. "Ambiguity Attitudes and Social Interactions: An Experimental Investigation," Economics Working Paper Archive 590, The Johns Hopkins University,Department of Economics.
  10. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2008. "The Impact of Social Comparisons on Reciprocity," Discussion Papers 2008-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  11. Tor Eriksson & Anders Poulsen & Marie-Claire Villeval, 2008. "Feedback and Incentives : Experimental Evidence," Working Papers 0812, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  12. Bo\u{g}açhan Çelen & Shachar Kariv & Andrew Schotter, 2010. "An Experimental Test of Advice and Social Learning," Management Science, INFORMS, vol. 56(10), pages 1687-1701, October.
  13. Gächter, Simon & Nosenzo, Daniele & Sefton, Martin, 2012. "Peer Effects in Pro-Social Behavior: Social Norms or Social Preferences?," IZA Discussion Papers 6345, Institute for the Study of Labor (IZA).
  14. Patrick Bayer & Randi Hjalmarsson & David Pozen, 2007. "Building Criminal Capital behind Bars: Peer Effects in Juvenile Corrections," NBER Working Papers 12932, National Bureau of Economic Research, Inc.
  15. Clark, Andrew E & Youenn Loheac, 2003. ""It Wasn't Me, It Was Them!" Social Influence in Risky Behaviour by Adolescents," Royal Economic Society Annual Conference 2003 44, Royal Economic Society.
  16. Ramana Nanda & Jesper B. Sørensen, 2010. "Workplace Peers and Entrepreneurship," Management Science, INFORMS, vol. 56(7), pages 1116-1126, July.
  17. Robert Moir, 1998. "A Monte Carlo Analysis of the Fisher Randomization Technique: Reviving Randomization for Experimental Economists," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 87-100, June.
  18. Matthias Sutter, 2008. "Individual behavior and group membership: Comment," Working Papers 2008-23, Faculty of Economics and Statistics, University of Innsbruck.
  19. Ananish Chaudhuri & Sara Graziano & Pushkar Maitra, 2006. "Social Learning and Norms in a Public Goods Experiment with Inter-Generational Advice -super-1," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 357-380.
  20. Josh Lerner & Ulrike Malmendier, 2013. "With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship," Review of Financial Studies, Society for Financial Studies, vol. 26(10), pages 2411-2452.
  21. Harrison Hong & Jeffrey D. Kubik & Jeremy C. Stein, 2001. "Social Interaction and Stock-Market Participation," NBER Working Papers 8358, National Bureau of Economic Research, Inc.
  22. Armin Falk & Andrea Ichino, 2006. "Clean Evidence on Peer Effects," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 39-58, January.
  23. Lundborg, Petter, 2006. "Having the wrong friends? Peer effects in adolescent substance use," Journal of Health Economics, Elsevier, vol. 25(2), pages 214-233, March.
  24. Christian Thöni & Simon Gaechter, 2014. "Peer Effects and Social Preferences in Voluntary Cooperation," CESifo Working Paper Series 4741, CESifo Group Munich.
  25. Schotter, Andrew & Sopher, Barry, 2007. "Advice and behavior in intergenerational ultimatum games: An experimental approach," Games and Economic Behavior, Elsevier, vol. 58(2), pages 365-393, February.
  26. Uri Gneezy & Jan Potters, 1997. "An Experiment on Risk Taking and Evaluation Periods," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 631-645.
  27. Luigi Mittone & Matteo Ploner, 2011. "Peer pressure, social spillovers, and reciprocity: an experimental analysis," Experimental Economics, Springer;Economic Science Association, vol. 14(2), pages 203-222, May.
  28. Manski, C.F., 1991. "Identification of Endogenous Social Effects: the Reflection Problem," Working papers 9127, Wisconsin Madison - Social Systems.
  29. Edi Karni, 2009. "On the Conjunction Fallacy in Probability Judgment: New Experimental Evidence Regarding Linda," Economics Working Paper Archive 552, The Johns Hopkins University,Department of Economics.
  30. Cormac O Grada & Morgan Kelly, 2000. "Market Contagion: Evidence from the Panics of 1854 and 1857," American Economic Review, American Economic Association, vol. 90(5), pages 1110-1124, December.
  31. Powell, Lisa M. & Tauras, John A. & Ross, Hana, 2005. "The importance of peer effects, cigarette prices and tobacco control policies for youth smoking behavior," Journal of Health Economics, Elsevier, vol. 24(5), pages 950-968, September.
  32. Veneta Sotiropoulos & Alain D'Astous, 2012. "Social Networks and Credit Card Overspending Among Young Adult Consumers," Journal of Consumer Affairs, Wiley Blackwell, vol. 46(3), pages 457-484, 09.
  33. Schotter, A. & Sopher, B., 2001. "Social Learning and Coordination Conventions in Inter-Generational Games: An Experimental Study," Working Papers 01-10, C.V. Starr Center for Applied Economics, New York University.
  34. Amrei M. Lahno & Marta Serra-Garcia, 2012. "Peer Effects in Risk Taking," CESifo Working Paper Series 4057, CESifo Group Munich.
  35. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
  36. Jeffrey R. Brown & Zoran Ivkovic & Paul A. Smith & Scott Weisbenner, 2008. "Neighbors Matter: Causal Community Effects and Stock Market Participation," Journal of Finance, American Finance Association, vol. 63(3), pages 1509-1531, 06.
  37. Andrew Schotter, 2003. "Decision Making with Naive Advice," American Economic Review, American Economic Association, vol. 93(2), pages 196-201, May.
  38. Martin Kocher & Matthias Sutter & Florian Wakolbinger, 2014. "Social Learning in Beauty-Contest Games," Southern Economic Journal, Southern Economic Association, vol. 80(3), pages 586-613, January.
  39. Keck, Steffen & Diecidue, Enrico & Budescu, David V., 2014. "Group decisions under ambiguity: Convergence to neutrality," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 60-71.
  40. Lahno, Amrei M. & Serra-Garcia, Marta, 2012. "Peer Effects in Risk Taking," Discussion Papers in Economics 14309, University of Munich, Department of Economics.
  41. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  42. Sutter, Matthias, 2007. "Are teams prone to myopic loss aversion? An experimental study on individual versus team investment behavior," Economics Letters, Elsevier, vol. 97(2), pages 128-132, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:not:notcdx:2013-01. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Suzanne Robey)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.