Peer effects in risk aversion and trust

Existing evidence shows that risk aversion and trust are largely determined by environmental factors. We test whether one such factor is peer influence. Using random assignment of MBA students to peer groups and predetermined survey responses of economic attitudes, we find causal evidence of positiv...

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Bibliographic Details
Published in:The Review of financial studies 2014-11, Vol.27 (11), p.3213-3240
Main Authors: Ahern, Kenneth R, Duchin, Ran, Shumway, Tyler Graham
Format: Article
Language:English
Subjects:
Abneigung
Assignment problem
Attitude surveys
Causal analysis
Coefficients
Cognitive psychology
Lotteries
MBA
MBA programs & graduates
Michigan
Peer groups
Peers
Property trusts
Risiko
Risk aversion
Risk management
Social interaction
Soziale Gruppe
Student
Student surveys
Students
Studies
Survey responses
Trust
Vertrauen
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Summary:Existing evidence shows that risk aversion and trust are largely determined by environmental factors. We test whether one such factor is peer influence. Using random assignment of MBA students to peer groups and predetermined survey responses of economic attitudes, we find causal evidence of positive peer effects in risk aversion and no effects in trust. After the first year of the MBA program, the difference between an individual and her peers' average risk aversion has shrunk by 41%. Finding no peer effects in trust is consistent with recent research showing that distinct cognitive processes govern risk aversion and trust.
ISSN:0893-9454
1465-7368
1465-7368
DOI:10.1093/rfs/hhu042