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Keep Up With the Winners: Experimental Evidence on Risk Taking, Asset Integration, and Peer Effects


  • Marcel Fafchamps

    (University of Oxford)

  • Bereket Kebede

    (University of East Anglia)

  • Daniel John Zizzo

    (University of East Anglia)


The paper reports the result of an experimental game on asset integration and risk taking. We find evidence that winnings in earlier rounds affect risk taking in subsequent rounds, but no evidence that real life wealth outside the experiment affects risk taking. We and some evidence of imitation of the risk taking behavior of others that is distinct from learning. Controlling for past winnings, participants who receive a low endowment in a round engage in more risk taking. We also test a keeping-up-with-the-Joneses hypothesis and find some evidence that subjects seek to keep up with winners. Taken together, the evidence is consistent with risk taking tracking a reference point that is affected by social comparisons.

Suggested Citation

  • Marcel Fafchamps & Bereket Kebede & Daniel John Zizzo, 2014. "Keep Up With the Winners: Experimental Evidence on Risk Taking, Asset Integration, and Peer Effects," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 14-03, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:wcbess:14-03

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    References listed on IDEAS

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    Cited by:

    1. Filippin, Antonio & Gioia, Francesca, 2017. "Competition and Subsequent Risk-Taking Behaviour: Heterogeneity across Gender and Outcomes," IZA Discussion Papers 10792, Institute for the Study of Labor (IZA).
    2. Astrid Gamba & Elena Manzoni & Luca Stanca, 2017. "Social comparison and risk taking behavior," Theory and Decision, Springer, vol. 82(2), pages 221-248, February.
    3. Baghestanian, Sascha & Gortner, Paul J. & van der Weele, Joël J., 2014. "Peer effects and risk sharing in experimental asset markets," SAFE Working Paper Series 67, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
    4. Simon Gaechter & Lingbo Huang & Martin Sefton, 2017. "Disappointment Aversion and Social Comparisons in a Real-Effort Competition," CESifo Working Paper Series 6489, CESifo Group Munich.
    5. Müller, Stephan & Rau, Holger A., 2017. "Decisions under uncertainty in social contexts," Center for European, Governance and Economic Development Research Discussion Papers 290, University of Goettingen, Department of Economics.
    6. Rau, Holger & Müller, Stephan, 2017. "Decisions under Uncertainty in Social Contexts," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168228, Verein für Socialpolitik / German Economic Association.
    7. Konstanting Lucks & Melanie Lührmann & Joachim K. Winter, 2017. "Peer effects in risky choices among adolescents," IFS Working Papers W17/16, Institute for Fiscal Studies.

    More about this item


    risk; asset integration; social comparisons; prospect theory;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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