Social comparison and risk taking behavior

This paper studies the effects of social comparison on risk taking behavior. In our theoretical framework, decision makers evaluate the consequences of their choices relative to both their own and their peers’ conditions. We test experimentally whether the position in the social ranking affects risk...

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Bibliographic Details
Published in:Theory and decision 2017-02, Vol.82 (2), p.221-248
Main Authors: Gamba, Astrid, Manzoni, Elena, Stanca, Luca
Format: Article
Language:English
Subjects:
Attitudes
Behavioral/Experimental Economics
Decision making
Earnings
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Finance
Gain
Game Theory
Insurance
Investment bankers
Management
Operations Research/Decision Theory
Psychological aspects
Ranking
Risk
Risk aversion
Simulation
Social and Behav. Sciences
Sociology
Statistics for Business
Studies
Tasks
United States
Utility functions
Wages
Wages & salaries
Work environment
Workplaces
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Summary:This paper studies the effects of social comparison on risk taking behavior. In our theoretical framework, decision makers evaluate the consequences of their choices relative to both their own and their peers’ conditions. We test experimentally whether the position in the social ranking affects risk attitudes. Subjects interact in a simulated workplace environment where they perform a work task, receive possibly different wages, and then undertake a risky decision that may produce an extra gain. We find that social comparison matters for risk attitudes. Subjects are more risk averse in the presence of small social gain than social loss. In addition, risk aversion is decreasing in the size of the social gain.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-016-9562-z