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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.

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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.

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Date of creation: Jan 2013
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Handle: RePEc:not:notcdx:2013-01
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Web page: http://www.nottingham.ac.uk/economics/cedex/

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